The life of an entrepreneur and the self-employed worker has its benefits, but a lot of responsibilities fall on you. A perfect example is arranging your compensation schedule.
For self-employed workers, keeping track of payments is essential. But what is the best way to track owed and received payments?
Your invoices are the best place to start. Improved invoice management helps your clients know when payment is due, but an invoice can also help you keep your payments organized.
But let’s say you aren’t the most organized person and are unsure of how to keep track of your payments.
If your goal is to better chart your payments, here are 8 tips for effective invoice management.
8. Automatic Payment Reminders
These are follow-ups reminding your clients to pay you. With payment reminders, you can include how much they owe and when you expect payment.
If a client doesn’t pay you, then you’ll be alerted and can go ahead and contact them. When you receive payment, you’ll be automatically notified and you’ll immediately receive compensation.
There are many ways to use invoice management for these systems, depending on the type of work you do. If you get paid per project, you can even request to be notified when a project is approved. From there, you can request payment.
Since payment reminders are automatic, you don’t have to keep checking if you received compensation.
Automatic payment reminders help solve several issues when being paid. There’s no reason for you to contact clients unless they don’t pay you.
The automatic payment reminder system helps keep your invoices better organized.
7. Invoice Numbering System
You can easily implement invoice management using a numbering system. This is really helpful, especially when you organize the invoices by pay period or by a numerical value.
If you have issues tracking invoices, this will help to resolve any organization issues.
A great place to start is storing your invoices within your computer. Give each invoice the same file name (example: CompanyInvoice_1) and represent each invoice with a numerical value.
Or, give the file name a date (example: CompanyInvoice_9_1_2017) if it’s easier for you to keep track of a pay period.
There are several benefits to organizing the storage of your invoices; one of the major benefits is keeping track of your payments.
Let’s say one week, you did more work and are expected to be paid really well. You can keep track of the work you did, how much you got paid hourly or per project, and your expected amount of payment.
When you send your invoice, you’ll be confident about the amount you’re expected to receive.
6. Make the Payment Process Simple
If you truly want to use invoice management effectively, make the payment process easy for you and your clients.
See if you and your clients can update your invoices in real-time. Create a spreadsheet or a document where you and your client can be on at the same time, viewing and editing your invoice.
This way, you’ll see when your client is accessing your invoice.
Another alternative to real-time invoices is sending them in a convenient manner. Email and text options are the easiest and quickest way to send your invoices to your clients.
Have a section where you can input your hours, work, and payment. Leave a section for your client’s comments and have an area where your client can check off and state the payment is sent.
To increase the convenience even further, select a payment option that will automatically notify you when you receive payment. Make sure to let your client know you received your compensation.
When you and your clients are simplifying your invoices, you don’t have to remind them and you can automatically be notified of payment.
5. Late Payment Penalty
What happens when you try all of the steps above, and your clients are still not paying on time? If you believe your invoices are collecting dust in your clients’ inboxes, start penalizing them for late payments.
There are many ways to penalize clients for turning in a payment late. State you will charge a late fee, and that fee will increase over time.
You can also state you only allow your work to be used after you receive payment.
For these reasons, it’s advised you have a contract. State the terms of late payment penalties and make sure your clients acknowledge them. This way, you’ll legally be safe in case your clients decide to turn around on you.
4. Automated Invoice Processing
Everything is more convenient when it’s automatic, especially when it’s the entirety of data from your invoices. You can process your invoice where the entirety of data and validation is transferred automatically to your clients.
This is especially convenient if you struggle with invoice management or procrastinate on compiling and sending them.
This is what data can be automatically transferred to your clients:
1. Data processing
What if your invoices aren’t as extensive? You can set up automatic invoices for specific data, such as storage and approval.
It’s easy to procrastinate on making your invoices or compiling a last-minute invoice that loses a lot of information. But with automatic processing, the data will be implemented, sent, and verified without you lifting a finger.
Your invoices will be sent out in a rapid amount of time and will be thorough enough for clients.
3. Template Customization
Maybe you’re able to stay organized, compile your data, efficiently manage your files, and send out invoices on time. But you want your invoices to be easier to read and have an effective design that’s easy to add data to.
Typical spreadsheets can be so bland. Find a way to customize the template of your invoice while using invoice management.
And don’t be afraid to put a personal touch or use creativity. If you’re an art-based professional, put some of your work and designs into the invoice.
Or, maybe you’re not a great artist but appreciate unique documents. Find templates to spice up your invoice. There are numerous templates online and you can use a document or spreadsheet program to spice up your invoices.
It’s also a great idea to incorporate brand identity into your invoices. Always use your logo on every invoice. Go a step beyond the typical appearance of your invoice.
2. Send Invoices on Time
This may seem like common sense, but get in the habit of sending your invoices on time. It’s easy for life to get in the way. You either forget to send your invoice, or think you have but never actually did.
Not everyone is born to be an accountant.
Stay organized and exercise better invoice management. It’s not only fair that you ensure timely payment, but it’s also fair to your client. You want to look professional and you don’t want to leave your client hanging.
Sending your invoices on-time is another way for your clients to understand you’re reliable.
So what’s the best way to remember to send those invoices? Fortunately, technology makes this step easier than ever. Set alarms on your phone or computer. You can even create events and set email reminders.
If your clients utilize direct deposit, you should also make it a point to check your bank account every day. This simple reminder will help you keep track of your payments.
1. Time Tracking
Charging a project fee makes invoice management a lot easier. But what if it’s easier for you or your client to pay by the hour?
You can always calculate your hours and breaks manually on a spreadsheet. But what if you took lots of breaks?
What if you had to stop working for a period of time? Is there an easier way for you to honestly document your hours?
Find software that will automatically track your hours. You’ll be able to turn these systems on when you’re working and off when you’re not working.
Time tracking is especially beneficial if you’re given a deadline or a specific amount of time to work on a project.
You can even send screenshots and work samples before the work is complete. This shows your client how much work you did and how much longer it should take to complete a project.
This ensures trust and professionalism with your client. If you both agreed on an hourly wage and amount of time you’ll be working, it’s best to stick with the agreed upon terms for ethical purposes.
Time to Improve Your Invoice Management
There are several reasons why it’s important to exercise invoice management.
When you have improved invoice management, you have better organization, lack of delays and lack of penalties from you and your client, reducing stress and getting regular cash flow.
Whether you feel comfortable manually entering data and sending invoices or prefer the automatic method, it’s best for self-employed professionals to start implementing invoice management best practices.
If you’re looking for the most efficient invoice management system, there are products that will take the invoicing off your shoulders so you can pursue what you love.