Are you wondering how to bill clients and get paid faster? You have come to the right place. How to bill clients is an important business discipline.You can implement the processes and habits shared in this blog in an hour or two and the reward is getting paid faster for years to come.
So, commit to this for 60 days and you’ll see how your business changes. Your clients will start to see you as a real business person who uses systems and processes. You’ll be happier when you don’t have to worry about invoices being paid on time. Which means growing your business gets much easier over time.
Now let’s get into the step by step process of how to bill your clients so you can get paid faster. The first few steps are one off actions you need to take. Once these processes are in place your business will run much more smoothly. If you can cut a few hours off your invoicing and payments each month you’ll have more time to get new clients. So let’s get started.
What is Client Billing?
Client billing is the process of charging clients for goods or services provided by a business. It includes detailing costs, specifying payment terms and adding a transparent payment method. Client billing is important for both business and clients so everyone gets paid fairly and trusts each other.
Benefits of Client Billing:
Client billing is key to positive cash flow, strong client relationships and getting paid on time. A well structured billing process will prevent billing errors and disputes and give your business a professional image. By implementing a client billing system you can streamline your billing, reduce errors and improve your overall financial management.
How to bill clients like a professional: A step by step guide
Use these steps and your business will have better cash flow and less hassle. For this process we’ll assume you have a service based business (e.g. freelancer, agency, coaching or consulting company) and you’re working with clients and focusing on billing clients.
Bill clients like a professional by following these 5 steps:
- Update your contract for invoice and payment clarity
- Create your billing process (Checklists, Templates, and Tools)
- Make it easy for your clients to pay you
- Develop an invoice payment follow-up process
- Optimize your business payment process
Step 1: Update Your Contract For Invoice and Payment Clarity
The foundation of your billing process starts with your business contracts. Review your contract template and review how the document describes your fees, invoice process and payment expectations. Avoiding common billing mistakes is key to a smooth invoicing and payment experience. Use the following self assessment questions to check if your contract is clear enough.
- Does the contract specify pricing and fees?
When possible use a fixed price contract (e.g. the fee is $6,000 per month) as these are easy for clients to understand.
If you have an hourly contract (e.g. the hourly rate for web development services is $100 per hour) there is more chance of client disputes. This guide will cover techniques to reduce invoice disputes on hourly contracts later.
- Is the contract clear on the payment due date?
The client should be clear on when invoices are due. For example you might state: “invoices are due for payment within 15 calendar days.”
- Does your contract have clauses for late invoice payment? (If not see our guide on how to charge late fees on invoices)
Having a clause for late invoice payment is a way to let clients know you expect to be paid on time. For example you might charge $100 or 1% of the invoice amount when an invoice is late.
- Does the contract describe your payment process?
The client should also have a clear understanding of how you wish to receive the payment for your invoice, is it through Bank Transfer or platforms like PayPal. Discuss this prior with your clients so they are on the same page.
After reviewing your contract you will probably find areas to improve your contract. After updating your contract, consider having a legal professional review the document for extra peace of mind.
What if you’re just starting out in business? You may not have a business contract in place yet. Don’t worry you don’t have to start from scratch. Use one of the following free contract templates CheckYa has created:
- Freelance Graphic Design Contract Template: 5 Templates To Save Time In Your Business
- Virtual Assistant Contract: Sample Contract & Template
Step 2: Create Your Billing Process (Checklists, Templates, and Tools)
Now that your standard contract is clear on the billing process it’s time to bring your contract to life with processes. Simply follow these steps to create your billing process.
- Choose A Time For Billing
Choose a regular time to manage your billing in your business. Many freelancers use the “finance Friday” habit – they do all the company’s financial activities – including sending invoices – on Fridays. For example, schedule 11 am-12 pm on your calendar each Friday to work on invoices. You will probably bill on time if you have a set time. Don’t worry – it won’t take a full hour!
- Choose A Digital Invoice Tool
Using a digital invoice tool like CheckYa is one of the best things you can do to improve your billing process. With CheckYa you can send unlimited invoices and use a pre-built invoice template to save time. Billing software like CheckYa can also help you manage invoices, track payments and be more organized.
- Create An Invoice Template
One of the keys to learning how to bill clients is to use templates rather than starting from scratch. For example an invoice template should have your business name, contact information and payment instructions. To save time, create an invoice template once and use it every time.
- Check The Invoice For Errors
Sending error free invoices is one of the best ways to get paid on time. So take a few minutes to check your invoice against the contract. Specifically check the dollar amount and that you’re sending the invoice at the right time. If your contract says you’ll send the first invoice when the graphic design draft is sent, double check that the draft has been sent to the client before sending the invoice.
- Check Invoice Payment Reminders Are Set Up
Life happens and your clients may not always be ready to pay you on time. They may be out of the office, sick, or simply distracted by something else.
To mitigate this risk, set up invoice payment reminders using invoicing tools like CheckYa. CheckYa lets you send automatic payment reminders so you can focus on growing your business.
Also read: 8 Polite Invoice Payment Reminder Emails That Work [Free Templates]
- Minimizing disputes with hourly rate invoices
Invoice disputes are more likely when you operate on an hourly rate. To see why, consider the following scenario.
You offer software consulting services to clients for $100 per hour. You bill clients for about 10 hours a month (i.e. $1,000). But this month Microsoft released a new update that requires extra customization and you end up working 20 hours (i.e. a $2,000 invoice).
When a client sees your invoice is double the usual amount they may question the invoice and delay paying you. The solution to this problem is to communicate early and often with your client.
Start tracking your hours weekly for each client you work with. If your billable hours go above and beyond the average contact the client to explain the situation. Use the following email template:
“Hi Client,
I’m reaching out to let you know that next month’s invoice will likely be higher than usual. At this point I estimate I will work 35 hours this month for you rather than the usual 20-25 hours. There are a few reasons for the higher fees:
Reason 1 (e.g. “the new WordPress plugin we installed last month took longer than expected to configure”) Reason 2 (e.g. “there was a server problem and I had to restore the entire website from a backup and complete testing to verify it was working properly”)
If you would like to discuss this or request a monthly maximum (e.g. $3000) let me know and we can discuss options.
The most important practice is to never surprise clients with an unexpected invoice increase whenever possible. In the long term switching to fixed fees is the best way to minimize hourly rate invoice disputes.”
The most important practice is to avoid surprising clients with unexpected invoice increases whenever possible. In the long term, switching to fixed fees is the best way to reduce hourly rate invoice disputes.
Step 3: Make It Easy For Your Clients To Pay You
Making it easy for your clients to pay your invoices is also important. In many cases your client is probably busier than you! They may be managing a team of employees, working with several freelancers and having family responsibilities. With all that on their mind, paying invoices may not be their top priority.
At the very least make sure you are using a digital payment process. There is no reason for business owners to wait for checks to arrive in the mail! Using invoicing software can streamline the billing process, allow you to create professional invoices quickly, set reminders and integrate with accounting tools for better financial oversight. CheckYa offers multiple payment processing options including Stripe, PayPal and Coinbase for cryptocurrency.
Bonus Tip:
What if your client tells you they are not familiar with CheckYa? In that case it’s a good idea to schedule a 15 minute meeting with your client (or the person who handles payments for the client) to walk them through the process. Walking them through the process of paying with CheckYa only takes a few minutes for most clients.
For best results update your client onboarding process to include the invoice payment. Taking 5-10 minutes to discuss the payment process with new clients when you onboard them is one of the best ways to minimize payment delays.
Step 4: Develop An Invoice Payment Follow Up Process
After following the steps in this guide you have the process and tools to send invoices on time every week. Now you need to follow up on invoices to ensure you get paid and prevent late payments.
Since most businesses pay monthly we recommend using a monthly invoice payment follow up. Let’s say your invoices are sent on the 1st of the month and due by the last business day. In that case the following follow up process will give you the most cash flow.
- Middle of the Month
You’ve already sent most of your invoices out about two weeks ago. Check to see if any payments have come in early. If you have received early payment send a quick thank you to your clients to let them know you appreciate it.
- Last Week of the Month
By the last week of the month you should check how many invoices are still outstanding. Hopefully you are using CheckYa’s automated payment reminders to save time.
- Day Before Invoice Payment Deadline (optional)
Checking and following up on invoices the day before they are due is optional. But there are circumstances where this level of invoice monitoring is helpful. For example if you are working with a new client. Or if you sent an unusually large or complex invoice.
To understand why large and complex invoices can cause delays, put yourself in the client’s shoes. They may be used to paying a $5,000 invoice. Then they get an $8,000 invoice. Even if you’ve communicated with the client beforehand they may still be unhappy. They may have questions about the invoice. You can minimize payment delays by communicating with clients about these unusual invoices before the deadline.
- 2-7 Days After the Payment Deadline
If the delays continue you may want to consider charging invoice late fees. If you are new to invoice late fees read our guide: How To Charge Late Fees On An Invoice And Get Paid Faster. Surprising a client with a late payment penalty is never a good idea!
- Follow Up By Phone (optional)
Most of the time a few automated invoice payment reminders will get you paid on time. In a small number of cases email isn’t enough. You’ll need to pick up the phone and call your client.
Before you call the client take a minute to prepare by going through the following:
- Check that the invoice was sent to the client
- Check that the due date has passed
Once you’ve done that, call the client and remind them to pay the invoice. If the client has personal problems (e.g. an illness) wish them well and tell them you’ll follow up in a week. If they ask for a payment plan – like paying your $10,000 invoice in installments – listen to their concerns before you agree to it.
When you use CheckYa to send out invoices you can send automated invoice payment reminders. But still check on payments and reply to your payment reminders. For example your clients may have questions for you before they pay.
Step 5: Refine your business
By the time you get to step 5 you are already a more mature business owner than most people. You know how to bill clients and keep cash flow moving. After step 5 you’ll be part of the business elite.
Open up your calendar and schedule a 30 minute appointment with yourself in the next 30 days. This 30 minute session will allow you to review your business and look for ways to save time and make more money. During the meeting ask yourself:
- Which invoices are paid quickly? Which are paid slowly?
You may find that some services (e.g. a fixed price SEO audit) are paid faster than others. If that’s the case you may want to change your business to focus on services that are easy to understand and get paid for quickly.
- What invoice questions have you been asked by clients in the last month?
When you get the same question over and over that’s a sign for you to not ignore it. For example, clients who pay by check may need support to switch to a digital payment process. In that case create a one page “invoice payment guide” you can send to clients to help them pay you on time.
- How can you improve your sales process to get paid on time?
No business owner should spend a lot of time chasing unpaid invoices every month. During this review time look for patterns among clients that pay late or cause you trouble.
For example you may find that very small businesses don’t have a dedicated accounts payable person so invoice payments are delayed. In that case you may want to change your sales process to focus on bigger businesses with better payment systems.
Each time you go through this process you’ll find new ways to run your business more efficiently.
Billing Options
Billing Types
There are many types of billing options to choose from, each with its pros and cons. Here are the most common:
- Hourly: Charge clients based on hours worked on a project or task.
- Project: Charge clients a fixed fee for a specific project or task.
- Retainer: Charge clients a recurring fee for ongoing services or support.
- Flat rate: Charge clients a fixed fee for a specific service or task regardless of time.
- Value: Charge clients based on the value of the services.
When choosing a billing method you need to consider the type of services you offer, client preferences and industry standards. You may also want to use a combination of billing methods for different clients and projects.
By knowing the different billing types and choosing the right one for your business you’ll get paid fairly for your services and have happy clients.
Bill clients with CheckYa: Save time with every invoice you send
One of the best ways to get paid faster is to use a secure digital payment platform that simplifies your invoicing. CheckYa lets you send unlimited invoices so you can scale your business. For client peace of mind payments are processed by Stripe and PayPal. CheckYa also offers free invoice payment reminders so you can spend more time growing your business not chasing overdue invoices. Sign up now
