Running your own business also means doing your own billings, or accounts, or invoicing each month. Most start-ups will handle this process themselves so as to reduce overheads, and as the business grows they may outsource this function or even hire an assistant to manage the financial running of things on their behalf.
As we are not all ‘numbers’ people, it is sometimes good to hand this function over to someone who knows what they are doing. If however, you decide to do your company’s billings yourself, there are a few things to bear in mind when getting started.
Firstly, how will you charge?
You could charge per hour, for all work done. You could have different hourly rates for different types of work. You could offer discounted rates if you are doing a lot of work for a specific client on a regular basis. You could go the route of retainers, which allows you to budget for your own finances and cash flow more easily. Retainers often also put the client at ease, as they know what to expect with each invoice. Nasty surprises can occur when you don’t have a client on a retainer, but are doing a lot of work for them, you may end up not being able to charge for all of the work you have already done.
Set clear boundaries with clients. Especially new clients where you are sorting out their backlog first. Getting up to speed with something takes time and costs money.
Plan in advance. Warn your clients if they have a set amount they are comfortable paying so that they can advise you whether to continue working for them that month still or not. Some clients may prefer to halt services until the start of the new month when they can afford your services again.
Review the amount of work you are doing each month and revisit the agreed upon retainer amount if you are working consistently more or less than the agreed upon retainer amount.
How will you keep track of your time?
There are different ways of monitoring your time spent. You could download a stopwatch app to your workstation and record every second of work that you perform. Some people prefer to use the timer on their cellphone so that it doesn’t get in the way of their workstation screen.
Remember to be vigilant if you want to be accurate. You will need to then manually capture your recorded time somewhere (a schedule), each and every time you perform a task.
Ways of recording time.
There are so many different software packages available these days to purchase, which include timekeeping systems. However, these systems are often pricey and aimed mainly at bigger companies. In which case, some sort of a spreadsheet program (for example, Microsoft Excel) would work nicely instead.
Setup a timesheet template and record the date you did the work, the amount of time it took, and details of what you did. These details will help you to quickly process your invoices at month-end, and provide information to clients if they query the amount they have been billed.
Finally, you will need to decide when you will bill.
Most entrepreneurs and bigger businesses will bill in the last week of the month, so as to have cashflow for the first week of the month debit orders and monthly expenses.
Others bill on the 1st of the new month, for the prior month. This can work too if your clients pay on time. If you are offering a service, you may even charge your clients a month in advance, for standard services to be carried out in the coming month. If you are in the business of selling products, it is common practice to require payment upfront or with the actual delivery of the product (COD).
Try to stay consistent and bill on the same day or date each month. Obviously, weekends, public holidays and annual office closures can sometimes get in the way. Notify your clients if you are going to be billing them early.
Set a date in your calendar once a year to review your fees, to compare them to prior years and to increase them where necessary. This can be done in line with inflation, or slightly higher, so as to cover your own increased overheads in the new year. Warn clients well in advance that you will be increasing their fees and try to give reason/s why.
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