Mastering Billing & Collections: 3 Requirements for Success

Earlier in my career, I took a position as a Controller for a small yet promising online marketing agency. While we boasted renowned Fortune 500 clients and a reputation for innovative client service, it quickly became apparent that our business lacked a crucial element:

There wasn’t a consistent and accurate Billing and Collection Process.

Recognizing this gap, we implemented a well-defined process that led to rapid growth and eventually culminated in the sale of our agency to a prominent marketing holding company. Reflecting on this, I thought it would be good to explore three key requirements to improve your Billing and Collections Process, paving the way for a more streamlined and successful business.

1. Develop a Consistent Billing Process

The foundation of an efficient Billing Process lies in a signed customer contract, serving as a clear agreement between your agency and the client. To ensure a smooth transition from contract signing to invoicing and payment, consider the following steps:

• Notify the Accounting team: Once a customer contract is signed, promptly inform your accounting team to initiate the billing process.
• Include Invoicing Terms in the contract: Clearly define the timing, payment terms, and method of payment within the contract. This transparency eliminates any confusion and sets appropriate expectations.
• Implement regular billing cycles: Consistently perform billing on at least a monthly basis. By establishing this routine, clients come to expect timely invoices, leading to quicker payments.

2. Automate the System

Harnessing technology and automation significantly improves the accuracy and efficiency of your Billing System. Regardless of your agency's size, embrace the convenience and advantages of automation with these suggestions:

• Recurring billing: Use payment gateways like Authorize.net or Signapay.com to set up recurring billing. This automated feature ensures timely invoicing and mitigates the risk of overlooking billable items.
• Quickbooks Online integration: Automate the creation and distribution of invoices by leveraging Quickbooks Online. This software can generate invoices automatically and even email them to clients each month, saving you time and effort.
• Explore billing systems: Visit Capterra.com to explore various Billing Systems tailored to different industries and company sizes. Evaluate their features and find the one that aligns best with your agency's needs.
• Simplify payment methods: Offer diverse payment options, such as bank ACH and online credit card payments, to accommodate clients' preferences and facilitate timely payments.

3. Have a Collections Process on Past Due Invoices

A robust collection process is essential to ensure the prompt settlement of overdue invoices. Proactively managing past due invoices minimizes costs and time associated with collections. Consider the following strategies:

• Implement reminder systems: Implement automated reminders for clients with past due invoices. These gentle nudges serve as a simple yet effective way to jog clients' memory and encourage payment.
• Timely follow-up calls: As invoices reach the 30-day past due mark, initiate a phone call to the client to discuss payment deadlines. This personal touch demonstrates your commitment to resolving any outstanding issues.
• Flexible payment solutions: If clients face financial difficulties, consider negotiating alternative terms, adjusted amounts, or payment plans to facilitate payment while maintaining a positive business relationship.
• Consistency is key: Maintain regular and consistent follow-up with clients regarding overdue invoices. Avoid allowing too much time to pass, as it may prolong the collection process.

Keep the Cash Coming

The success of your business hinges on establishing robust contracts, implementing efficient processes, and leveraging automation to streamline your Billing and Collections Process. By prioritizing these aspects, you can minimize old collection issues and free up time to focus on your core competencies.

I understand billing and collections are many business owners’ and marketing agencies' least favorite tasks. If the burden of billing and collections becomes overwhelming, consider outsourcing to a fractional CFO like Bender CFO Services. Our expertise in managing billing and collections can alleviate your workload, preserve business relationships, and give you peace of mind regarding your finances.

Contact us today to get started.