Invoicing Clients & Receiving Payments

Having trouble keeping track of invoices and payments? Listen to this podcast for some tips around invoicing and getting paid on time.

Darell Brown

Welcome to the ProProject Podcast. A podcast for bookkeeping tips and tricks to make your project finances run a little smoother. The ProProject Podcast is brought to you by ProProject Bookkeeping, the bookkeeping firm specializing at project bookkeeping and accounting for creative firms. This is your host, Darell Brown. I'm talking to you on a very cold day in New York City. I will discuss some common issues I have seen around invoicing and more importantly, getting those invoices paid.

With invoicing, I see a lot of companies using separate invoicing systems outside of their accounting program. I've seen everything from Excel and Google sheet invoicing templates to a free online invoice generator being used to create invoices.

I understand sometimes as you need a quick way to get an invoice to a client, and these definitely serve that purpose. But as you start to grow, invoicing this way is difficult to keep track of. Most invoices have net 30-day terms. An Excel sheet invoice is not going to inform you that an invoice is 45 days past due. If you have one or two clients, this system is easier to keep track of, but if you have 5, 10, 20 clients with multiple invoices, keeping track of payment dates becomes a little more difficult.

So a few months could potentially go by before you realize, oh, we never received payment on this invoice and now you need to follow up with the client. I always recommend invoicing from within an accounting software or at least using an invoicing system that syncs with your accounting software.

Using a system like QuickBooks online, when you send an invoice, it includes tracking features. So you can see if your recipient viewed the invoice, each time they have viewed it and when they have viewed the invoice. And information like this can be very helpful when you're trying to collect payment.

In addition to this, you can create automatic reports to keep track of open and past due invoices. Do you want to receive an email report every Monday of open invoices, create an open invoice report, which will automatically generate and email you every Monday?

It's Monday, it's the start of the week. So it gives you some time to look through the open invoice list. See what's coming due and contact clients to just check on payment status or to give them a friendly reminder that the payment is coming due. But the most convenient part is, it's automatic. You don't have to search through your Excel invoices to check the date to see if it's coming due or past due. You'll just get that email every Monday and you'll know to follow up.

So using a system can help you keep track of invoices and payment dates, and you could use this information to follow up with clients and most importantly, it helps you to get paid within payment terms.

And speaking of payment terms, there needs to be a clear understanding of your payment terms with your client. This is an important aspect of getting paid on time. If your standard payment terms are net 30 days, but your client pays invoices on net 60 day terms, you need to have a discussion about this.

Once you agree to payment terms, your contract or proposal should also state the agreed upon terms. And of course, your invoice should state the payment terms as well as the due date. Any problems with past due payments, refer back to the signed contract with the agreed upon terms, and also who did you discuss the payment terms with. I've seen a lot of payment issues due to terms not being discussed or added to proposals and contracts. This situation with several clients can leave your company in a very vulnerable cash flow position.

So to recap, generate invoices from your accounting system. The accounting systems usually have features to help you keep track of open and past due invoices. Regarding payment terms, both parties should have a clear understanding of payment terms. Your contract must clearly state those payment terms and your invoice should of course state those terms along with the payment due date.

So that's my two cents on invoicing and getting those invoices paid on time. I hope these tips work for your business. If I have touched on some issues you're currently facing in regards to invoicing and payments, feel free to reach out to discuss. I can be reached at info@proprojectbooks.com. Once again, that's info@proprojectbooks.com. I'd love to hear from you.

Stay tuned for our four part podcast series around project bookkeeping and accounting. The first part of our series will be around project expense management. How does your company account for project expenses to be reimbursed by the client? What systems do you use? Do they make the process easier or harder? We want to hear from you and we'll incorporate a few responses into our next podcast. Please send your responses to info@proprojectbooks.com.

Thank you for listening and stay tuned for our four part series. This is Darell brown signing off. I'd like to wish you a happy holidays and happy bookkeeping.