As the operator of a small business, you will need to be able to manage your small business finances. With an efficient billing system in place, you will have a handle on your cash flow so that you may better plan your company's daily operations.

No matter how small your small business is, it is very important to have some sort of billing system. Don't wait for a crisis to occur before you have your billing procedures in place.

Written Payment Policies

If you don't have written payment policies, write them out and include:

  • Who you will offer credit to
  • How much credit you will offer
  • How will you determine your customers' creditworthiness
  • When your bills will go out
  • In what time frame you will expect payment
  • How will you follow-up if a payment is not made

Control Cash Flow

Cash flow shortages are a challenge for many small businesses. Your company depends on cash flow to survive so you need to get paid for your services or products in a timely manner. You need to develop a successful collection procedure.

Here are some ways to better control your cash flow:

  • Set your billing policies before you make a sale
  • Don't let your product or service go out the door without payment if at all possible
  • Ask customers for credit references if you offer credit and then call those references
  • Consider requiring a retainer, a deposit or COD payment terms for customers that have proven to be poor payers
  • Clearly state the terms of sale in any customer contracts
  • Stay on top of billing so that you have money coming in on a steady basis
  • Offer discounts for prompt payment of invoices, such as a 2% discount if an invoice is paid within 10 days
  • Keep in touch and follow up immediately on unpaid invoices so that your customers understand that you expect to get paid
  • Set a payment date on any follow-up letters and call your customer on that date if your payment has not yet been received
  • Have a written script to use for any follow-up phone calls that you need to make may make the process easier for you

Consider Billing Software

If you own or manage a small business, you probably know how much time can be spent doing paper invoices, purchase orders and sales reports. Billing software allows you to record all your customers, sales, invoices, inventory, suppliers and more in a computer program that is generally easy to use.

Take your time and do your research when trying to decide what billing software program is best for you and your company. Choosing the wrong program for your business can cost you valuable time and money.

When choosing a billing software package for your business, make sure you check that it offers everything your business needs. Make sure that the billing software that you decide to use for your small business allows you to:

  • Enter customer records, including basic information as well as marketing-related information that is important to you
  • Record multiple contacts for a single business and a log of all communication with your customers
  • Create sales orders and record employee-related information, such as who the salesperson was
  • Easily search by customer phone number or address as well as order date
  • Change the tax rates on an order line basis and format currency if needed
  • Quickly produce accurate reports that can calculate information on sales based on date, salesperson and customer type
  • Has a built-in backup utility or works with your current backup system
  • Offers online help and support
  • Is within your budget
  • Has any additional features that you may need