Invoicing correctly isn’t all just about what’s written on the invoice. A large part of getting it right comes down to effective communication and relationship management. Here we run through our top 10 invoicing tips to help you not only get paid faster but also keep those customers coming back! 1. Get a contract First things first, get a contract and get it signed. Starting off on the right foot, with everyone on the same page will go a long way towards setting the tone for the remainder of the project. It’s in both party’s interest to get a contract signed. Without one, you’re at risk of being left in the lurch with no payment and they’re at risk of being overcharged or being left with an incomplete or inadequate end product. Now that’s no fun for anyone! 2. Be really specific Before you provide an estimate, make sure you uncover any unknowns so that you can be as accurate as possible with your figure. Make it really clear on your invoice what you are charging for. For a customer, it can be really frustrating receiving an invoice for which the charges are unclear. 3. If you’re out and about regularly, consider a mobile invoicing solution Getting paid quickly is largely due to getting your invoices out quickly. If you work in the field or you’re on the road a lot, consider a mobile invoicing solution to enable you to send invoices on the go. InvoiceASAP is a great tool that does exactly what it says on the tin. It also allows you to attach voice memos and photos to all your invoices and estimates which is great if you need to show before and after photos or proof of work. 4. Set your own payment terms This includes your invoicing dates and due dates. Take into account that there will, inevitably, be late payers and adjust your payment terms accordingly. Consider charging a percentage of the overall amount upfront, or setting payment milestones so that you get a steady flow of cash whilst carrying out the work. Be clear with your customers about your payment terms. For example, you may require a signature on estimates, and include due dates in every written piece of communication with your customer. 5. Keep communication with your client open, especially if the scope of work creeps Often you start working on a project with a client and realize, after you draw back the curtains, the full scope of the project was greater than anticipated when you initially provided your estimate. If you think you will go over the estimated amount, make sure you communicate this clearly to your client as soon as possible. No one likes being stung with an unexpected hike in price. So, rather than giving them a nasty surprise at the end of the project, or worse, undercharging, be completely open and explain exactly what you’re charging for and why. It is also worth addressing scope creep in the initial contract with a client. Many clients may require a Change Order to be signed which is essentially a secondary contract listing the additional hours, work, products or services required to complete the job. This way you will avoid leaving clients with a sour feeling at the end of a job and maintain a positive relationship with them. 6. Get a secondary contact for your invoices in case the primary contact is on vacation There’s nothing worse than receiving an out-of-office message from a client letting you know that they’re on vacation for the next few weeks, just after you’ve emailed them an invoice. Rather than waiting it out, make sure you have a secondary point of contact who you can call on to get the payment processed. Also, if you can be clear on invoicing dates from the start, you should get the heads up from clients if they will be away during those dates and ask for an additional contact during those periods. 7. Invoice as soon as possible after, or as products and services are supplied The sooner you submit your invoice, the sooner you’ll get paid. Honor your commitments too – if you deliver on time, you’re more likely to get paid on time. 8. Broaden your payment solutions Make it easy for customers to do business with you and they’ll be more likely to come back. By increasing your payment options, your client will not only be happier, you’re also more likely to get paid faster. 9. Keep on top of cash flow, track which invoices have been paid and which haven’t Always be on top of what’s been paid and what’s owed and have a timely system of reminders, monthly statements and phone follow-ups to lessen the risk of running into cash flow problems. 10. Consider using late-payment fees or prompt-payment discounts. If late payment is a common occurrence, consider dishing out penalties to those who don’t stick to your payment terms or offering discounts to those who pay up early. Do make sure this is included in your contract so that they are aware of the implications and so that you have something to refer back to if they take issue with paying a fee. Finally, when it comes to getting paid on time, it may feel like the majority of control is with the client. But by taking the lead, being organized, open and clear you will have more influence over when you’ll get paid. Photo credit: © XiXinXing istockphoto.com
A holiday card can be a great way to show your customers how much you value them. It’s more than just a formality, especially when crafted in a way that seems personal and dedicated. It can be an expression of gratitude and value. In the realm of conducting business and creating lasting relationships with customers, gratitude and personal connections are sometimes undervalued. This creates the need for customer appreciation that transcends the simple ‘thank you’ at the end of a receipt. In such an environment, you need to make each customer feel valued and remembered, no matter the size and scale of your company. And by far the best way to do so is remembering the customer on auspicious days, when everyone appreciates being remembered. If you own or work at a business and are thinking about sending out holiday cards this year, here are three great ways you can send holiday cards this year. 1. Email Holiday Cards There are many online companies that you can use to send out holiday cards. Paperless Post is our personal favorite website. Paperless Post has a gorgeous selection of holiday cards. You can customize your card with specialized fonts, suggested greetings, and upload corporate logos or staff photos. Photo Credit Photo Credit 2. Mail Your Holiday Cards Mailing out holiday cards is a great way to add a personal touch to your holiday cards. For a company that wants to mail cards to their customers, the best route to take is adding personalization; where each card and envelope is personalized with a unique message and accompanied with the name of the customer. Customizing your mailing address is a great way to stand out. Check out some of the designs on Fallfordesign. Photo Credit 3. Mail Handwritten Cards Handwritten cards are the most effective way of showing your customers your appreciation and value for them. Although the crème de la crème of personalized cards, they are also the most time consuming of the three options. However, we have found a cost effective and time saving way to send out these cards. Paperloveme will create handwritten personalized cards for you. Photo Credit These are few easy ways to show your customers that you care. Send them a holiday card today!
Getting paid. It’s wonderful, right? Then why is pricing work one of the trickiest parts of the job? Charge too little and you feel cheated. Charge too much and you may price yourself out of the market. Well, the truth is… it doesn’t have to be all that tricky. Whatever you sell – be it products or services – when it comes to pricing, you need to think strategically. In this post we’ll take a look at some of the key things to consider before you set your prices to help you avoid the pitfalls of just ‘winging it’. Let’s begin… Step 1: Determine your annual salary First off, you need to work out how much you want to get paid. If you’ve done a similar role before as an employee or know how much others earn doing the same work, use that as a guide. Whatever salary you choose to set for yourself, make sure it’s reasonable and reflective of your skills and experience. You’re clients will quickly realize if it’s not! Step 2: Calculate your overheads Now you need to calculate how much it costs to operate your business. Take stock of all your outgoings and work out how much they total on an annual basis. This includes things like: Accounting and bank charges Office or workspace costs Company car/van costs and insurance, fuel, servicing Work wear (if it’s necessary to wear protective/safety gear or a uniform) Equipment and tools Third party software, services and subscriptions Website running costs Marketing and advertising Stationery (pens, paper, stamps, business cards) Business insurance costs … And anything else you can think of! If you’re just starting out, you may have to estimate some of these expenses or ask other contractors in the same field what they pay in overhead, then use that amount in your calculations. Note: A lot of the costs associated with the day to day running of your business should be tax deductible. This means that you won’t have to pay tax on the money you earn to pay for these costs. Step 3: Choose a profit margin You’re fully entitled to earn a profit on top of your salary and overhead expenses. Your salary is one of the necessary costs of running a business. Profit, however, is the reward you get for taking the risks of being in business for yourself and it provides you with money to expand and develop your business. Profit is usually expressed as a percentage of total costs for each job. There is no standard profit percentage, but a 10% to 20% profit is common. Step 4: Determine billable hours How many days you will you be working over the course of a year? Although there are 52 weeks in the year, bear in mind that – unless you’re superhuman – you will need to take time off! Also, not all of your ‘breaks’ will be planned. Contracts may end unexpectedly and there could be periods where you struggle to find new work. Give yourself at least 20 days holiday – you may not take this all in the first few years of starting your business, but it’s good to err on the side of caution and not underestimate this as it will have an impact on your day/hourly rate. Based on this example, 20 days holiday takes your working weeks to 48 per year which equates to 240 working days per financial year, or 1,920 billable hours. Step 5: Calculate your day/hourly rate Now let’s work out how much you can charge by the day and by the hour. Use the following calculations to determine your rates: Add your chosen salary and overhead costs together. For example: $70,000 (salary) + $20,000 (overheads) = $90,000. Multiply this total by your profit margin. For example: 10% of $90,000 = $9,000; $90,000 + $9,000 = $99,000. Divide the total by your annual billable hours to arrive at your hourly rate: $99,000 ÷ 1,920 = $51.56. You may then want to round your hourly rate off to the nearest whole number (i.e. $52 in this case) Finally, multiply your hourly rate by 8 to reach your day rate. For example: 52 x 8 = $416 Now you have your rates! Awesome! But wait – it doesn’t end there… Step 6: Do some market research Before you dive in, it’s always wise to do a little market research to see what others in the industry are charging for their services. There are a few places to gather this information: Contact a professional organization or trade association for your field. They may be able to give you good information on what other Independent Contractors are charging in your area. Ask other Independent Contractors what they charge. Talk to potential clients – attend trade shows and business conventions, speak to your existing network. Whilst you’re weighing yourself up to others in the industry, make sure you factor in things like experience, and the quality of service offered. You may find you are charging more than others but that you produce more value for the client. Many potential clients are willing to pay more for quality, so don’t be scared to charge more if you feel it is justified and you can offer this. Step 7: Get a grasp of the entire job So you’ve worked out your rates and you’re starting to bring in customers. The next step is making sure you price each job correctly. For every piece of work you enter into, it’s super important to study up and get a good grasp on all the work involved. This will help you to provide your client with the most accurate estimate and you’ll be less likely to hit them with an unexpected hike in price because of unforeseen extras. Obviously this will happen from time to time, but it’s always best to get as much clarity as possible from the start. Read more: 10 Invoicing Tips for Small Businesses Step 8: Lather, rinse, repeat The fact is, not everyone gets it right the first time around. Make sure you keep evaluating your approach and try not to settle on any long-term commitments until you’ve found the right mix of pricing and strategy. As your business develops you may find that you’re in a position to offer greater value to clients. Adjust your price accordingly and if you begin to see price resistance you will start to get a sense of what costs are adequate for your services. Image credit: © studiogstock
This is a guest post by Chris Baskerville from his response to a question on Quora – What are the most common mistakes made by small to medium business owners? Follow Chris on Twitter @ChrisBaskervil A: Speaking from my experience as a Chartered Accountant with 11+ years experience in business reconstruction, insolvency, bankruptcy and liquidation, I can say that there are some common recurring mistakes made by Small to Medium Enterprises (SME). The most common mistakes I see are… 1. Undercapitalization This is like building a Boeing 747 airplane and leaving the tail off. You may not leave the ground on takeoff, or you may crash and burn shortly after achieving flight. I see too many businesses begin with very little capital and fall heavily reliant on debt with no alternate sources of equity. Without sufficient capital behind your business, you will fail. 2. Not reinvesting early year profits to achieve stabilization Another observation I have seen over many years is that all too soon, after a business starts to gain momentum, business owners want to upgrade their personal lifestyles (bigger cars, bigger houses, bigger holidays etc.) and not take those profits and reinvest them in the business to secure its long-term performance. In effect, business owners strip away the businesses’ precious resources that could be used for vital operations, or expansion. 3. Expanding too soon This concept took me a while to understand as to why expanding a business could be a bad idea. I mean, is this not what the nature of business ought to be? What I have found is that expanding your business before it has the key resources (cash, access to equity, access to credit) or key structure in place (i.e., key staff or management, well entrenched business systems, secured supply lines in place) can lead to disaster. Don’t underestimate organic growth. It may appear slow at first, but it is solid growth. 4. Chasing turnover at the expense of profits I have seen this many times in industries that are highly competitive (i.e., construction). Businesses that chase turnover “just to keep the boys employed” can lead to business failure, unless you are properly capitalized to weather the shortfall in work until more profitable contacts emerge. Take for instance employee costs; what some SMEs fail to realize is that employing staff incurs many costs that are not obvious (accrued annual leave, accrued long services leave, leave loading (extra money when you take holidays), workplace injury insurance, payroll tax, to name a few. Such costs can be overlooked when pricing a job. 5. Failure to seek (and listen to) proper advice Many SMEs subscribe to the lyrics in Frank Sinatra’s song (My Way) of “…I did it my way”. This concept has merit and is an obvious driver of commerce in an economy, but not seeking advice from someone with a different perspective, or someone that is very knowledgeable in business transactions (accountants, lawyers, financial planners, strategy experts) can be deadly. Good business owners that I see, always seek counsel from someone with a bigger perspective and surround themselves with the right people and advisers. 6. Failure to deal with people If people don’t like you, they won’t do business with you. Regardless of your personality type, it is a must to learn basic people skills. Without it, you can be “Hung by the Tongue”. This goes the same for dealing with your staff (who are your biggest asset) as they perform the tasks that business owners don’t want to do, or shouldn’t do on the quest to grow your business. 7. Not setting up the structure of the business correctly from inception This is an extension of not “beginning with the end in mind” Stephen Covey author of “The Seven Habits of Highly Effective People” and of failing to seek proper advice. A good accountant or lawyer will be able to advise you of the best way to structure your business to achieve your business goals. It may initially cost a few thousand to get this right, but it is one of the best insurance policies you will take. Understanding the pros and cons of being a sole trader, company, trading trust, limited liability partnership is vital to know at he beginning of a business’ life. Good accountants and lawyers know this and will guide you here. 8. Failing to adapt to change I have seen many multi-generational companies (i.e., companies that were handed down from father to son, or grandfather to son to grandson), with the newer generation failing to adapt to the changes in their industry. Instead, they adopted the thinking of the previous generation which is: “that is how we always did things”. Now with the rise of the digital age, businesses that fail to embrace technology or to see how to exploit it in their business are falling behind. 9. Taking on too much Some major corporate failures have occurred as a result of taking on too much work. This is liken to promising too much and delivering too little. It may seem weird that taking on more work than you can handle can be a bad thing, but this can get you into trouble. You may have a short term win when you eventually complete the work, but at the expense of long term repeat, referral work. Not to mention the impact on staff working under high stress demand to complete work. I have seen some restructuring occur where we had to strip the business back to its core offering in order to survive, which did mean reducing the amount of work taken on. 10. Reliance on one key customer This can be deadly, especially if that one key client is the government. This is because a change of government or government policy can mean the end of your business. Outside of government, if your one key customer fails in their business dealings, it is almost inevitably mean that you too will fail. Not to mention that business analysts see reliance on one key customer as ‘high risk’. 11. Greed You could just about paint a brush across many business failures as being attributable to greed. Greed could be encompassed in a number of forms; treating the business as a personal piggy bank; fraud by officers; avoiding a low-flying life; or simply, shooting for a project, job or file that is well outside the capability and available resources of the business. Over extension due to greed places undue stress on the business assets which may lead to ultimate failure. 12. Loggerheads at management A lot of business failure can be put down to a breakdown of relationships between the key managers of an organisation. This can include disputes between family members, disputes between partners, disputes between the relevant spouses of the directors of a business, the list goes on. Good businesses have agreements between the directors and shareholders (particularly in the SME space) as to how the relationship should work. I have always advised that agreements are not there for the good times, they are there for the bad times. 13. Failure to prepare a business plan Again this comes back to the teachings of Stephen Covey in not “beginning with the end in mind”. A business plan prepared prior to starting up a business makes you think about all the areas of the business and plan for those outcomes. Planning and mapping out the process will provide clarity and a sense of urgency to achieve your business goals. We don’t plan to fail, but we do fail to plan. There is a direct nexus and correlation between businesses that fail and the lack of business planning. 14. Failure to manage cash flow Cash flow is vital for all business operations. I liken cash to blood within our bodies. When you run out of blood, you die. It is all very good to appear profitable in your accounts, but it is not good if those profits don’t convert to cash in your bank account. 15. Inexperienced business people operating a business I have often thought that putting potential directors of a company through a training and assessment system before entering into business would be a good idea. There is a ‘Grand Canyon sized gap’ between being an employee, mastering your trade craft and becoming a business owner. Those skills are mutually exclusive. You could almost be better off putting an experienced business person in charge of a plumbing business, rather than having an experienced plumber in charge of that same business. Source: Small Business Failure Rate: 9 out of 10? Poor management is the number one reason for most SME failure. The economy has certainly added its contribution to failed businesses. Sadly, with most SMEs, the fate of the business is directly tied to the fate of the business owners’ family’s wealth, meaning that a collapse of the business almost inevitably leads to a loss of a family’s hard earned wealth. This also has knock on effects on domestic relationships. Another sad observation is the SMEs can be reluctant to seek proper advice early when the signs of failure rear their ugly head, meaning that by the time advice is sought, it is almost inevitably too late. I call this “ostrich syndrome” (bury the head in the sand, hoping the problem will go away). About the Author Chris Baskerville is a Partner at Jirsch Sutherland who has over 11 years in Corporate Reconstruction and Bankruptcy. Chris Baskerville has assisted many companies and people reconstruct their financial affairs which has seen those entities remaining successful today. Chris Baskerville is a Chartered Accountant, Justice of the Peace (Qualified), a member of the Institute of Chartered Accountants and a member of the Australian Restructuring Insolvency & Turnaround Association. Photo credit: iStockPhoto.com © ChristinLola
About the Author Anne Maxwell is COO at InvoiceASAP. The end of the year and beginning of a new year is a great time for assessing your business and setting goals for the future. Here are 5 resolutions that can help you grow your business in 2018. Resolution 1: Expand Your Social Media Presence Photo Credit Social media is a great way to market and promote your business for free. But which social media platform should you spend your time on? The answer to this question depends on 2 things: The type of business you have Where your customers spend their social media time Instagram or Pinterest are great choices if your business has a visual element to it, like food, flower arrangement, event planning, design, photography, or landscaping. Even companies like roofing, plumbing, window replacement, and garage doors can show the quality of their work visually. Post beautiful pictures that highlight the work you do. Twitter is a good choice for social media when: You have a technology or information based business You sell a product or service You’re just better with words Although you can attach photos to a tweet to give it visual appeal, at its core, Twitter is about what’s said, not what’s seen. Consider Facebook or LinkedIn if you want to build a community. Facebook is great for creating business-to-consumer relationships LinkedIn is great for business-to-business relationships Resolution 2: Get Productive! No matter how much we may want it, we’re not getting any more hours in the day. So we need to find ways to become more productive with the time we have. Here are some quick ways to get productive fast: Become friends with Siri, Bixby or OK Google. Learn how you can quickly accomplish tasks by talking to your phone, rather than typing on it. Use the microphone on your phone’s keyboard to dictate to your phone, rather than typing text. It’s much easier and quicker to speak a reply to a text or email than to type it. You can use simple punctuation commands like “period,” “question mark,” “new line,” or “paragraph” to format your message correctly. There are tons of apps that can help with productivity. Take some time to find the apps that work for your business. Here are some examples: Apps to schedule your social media posts, like HootSuite or Buffer Apps to take notes, like Any.Do, Evernote, or OneNote Apps to make lists, like Wunderlist or Todoist Apps to manage your email accounts, like Notion, Newton or Edison Mail Apps to handle routine tasks on your mobile device, like Automate or IFTTT (If This Then That) Apps to master project management, like Trello, BaseCamp or DropTask Apps to communicate effectively with your team, like Slack, WhatsApp or Stride Apps to help you stay focused on a task, like Forest, FocusList or Momentum Apps to easily digitize documents, like Genius Scan or Scanbot If you are you still uncomfortable using mobile apps, try Pen and Paper, which lets you hand-write notes or draw images. And there are many other apps, like time tracking, expense tracking, and (of course) mobile invoicing. Resolution 3: Use Your Email Signature Take advantage of an automated email signature to feature a product, offer a discount, or provide your customer with valuable information about your business or upcoming changes. This is a simple but extremely effective way to communicate with your customers. And remember to keep your message fresh. Make sure you change the message at least once every quarter. Resolution 4: Don’t Just Look Forward, Look Back as Well When you are planning your new year, it’s easy to simply keep looking forward. But there is a lot of value in looking back. If you’re a new business, the natural ebb and flow of a business cycle may not be evident. But if you’ve been in business for a few years, you can benefit from looking at the past years to identify slow or busy cycles. For the new year, you want to consider at least 2 areas: How can you more efficiently manage your busy times? How can you increase business during your slow times? Answering these 2 simple questions will help you be more productive in 2018. Resolution 5: Sharing is Caring Okay, I know this is a trite saying. But hear me out. One of your biggest assets are your employees and team members. They represent you and your business. Here are some simple ways to keep them engaged in their jobs: Monthly staff meetings. Update your employees on upcoming projects, successful projects or lost contracts. What was good? What could be improved? Listen to your employees. Use staff meetings to answer questions and listen to your employees. Maybe they have good ideas, and maybe they don’t. But most people appreciate being heard. Celebrate employees’ birthdays and/or work anniversaries. It doesn’t take much to pass a card around and get the others to sign it. Your employees will appreciate that you remembered them. In-office celebrations for holidays, like Valentine’s Day, St. Patrick’s Day, 4th of July, etc. These don’t have to be elaborate, expensive or time-consuming. A box of donuts in the morning or cupcakes in the afternoon is all it takes. If your employee feels like he or she is appreciated, feels like his or her opinion matters, feels like he or she makes a difference in your business, you’ll have lower attrition, higher employee satisfaction, and that employee will not only go the extra mile for you when you need it, but will represent your company well both on and off the job. Planning for 2018 Growing a business can be hard. It’s easy to say work smarter, not harder. These 5 resolutions can help you do that.