8 Easy Steps to a Winning Invoicing Strategy for your eCommerce Business - Financial news

8 Easy Steps to a Winning Invoicing Strategy for your eCommerce Business

One of the most important parts of any business, including eCommerce, is to ensure that the cash flow is positive and consistent.

How you will address your eCommerce invoice process will depend strongly on the type of business you are running –

  • Business to Business (B2B)
  • Business to Consumer (B2C)
  • Consumer to Consumer (C2C)
  • Consumer to Business (C2B)

Just to name a few. Each one will have a different eCommerce invoice approach you’ll have to use. In all of these cases, online invoicing is greatly suggested.

You will want to come up with a solid eCommerce invoice strategy that caters to each type of client accordingly. In the end, you want to be sure your client is satisfied with the result and you are able to reap the financial rewards.

However, this can be a difficult thing to do, especially when most business people, especially small business owners, tend to have a lot of tasks to do on a daily basis.

Let’s have a look at how to alleviate some of the pain of creating an eCommerce invoice and receive timely payments.

Create strategic policies

One of the most important things you can do is to be two steps ahead of your competition and your customers. This means, when it comes to invoicing, that you need to have firm policies in place that will help to avoid any unpleasant confusion or surprises when your clients get their eCommerce invoice.

Strategic, effective policies will help create a shared understanding between you and your clients. You may adjust these policies later on, and it is recommended, as the business develops and you get a better understanding of the needs and wants of your clients.

Depending on the size of the enterprise you’re dealing with, or may just be a single lonely client, figure out how the payment procurement will take place.

Your policies should go over the following:

  • Whether you’ll require payment upfront, or you may even offer installment payment options.
  • How much time will be allowed for your eCommerce invoice to be paid?
  • Whether you’ll charge late fees, either as a fixed amount or a percentage
  • What types of payments you’ll accept on your eCommerce invoice (such as cash, bank transfer, debit or credit, PayPal, etc.)
  • Whether you’ll deliver your products or services before or after payment
  • Return and refund policy

With these questions ironed out, you’ll be able to be on firm ground with your clients.

Create a quotation before each order

A smart invoicing strategy—or a smart strategy in general—is to have every agreement in writing. When dealing with other businesses, write down your agreements. Written agreements are solid evidence in case any disagreements or confusion arise. While your strategy may cover all of your clients, it doesn’t provide a specific agreement between you and your client for a specific job or a product purchase.

Some clients that go for larger orders may ask for an estimate or a quote of the possible cost associated with your goods and or services.

If by chance you are dealing with a large order that may come from another business, here are some things you should keep in mind –

  • Your client’s expectations
  • Timeframe for the products to be delivered?
  • The extent of the additional services (such as shipping) that you’ll be providing

These questions can only be answered on a case-by-case basis, and you’ll need to make sure you have them answered in detail. That way, you can point to this quote (that you’ll have sent to your client) as a reference.

Automate as much as you can

When it comes to any part of your business, you should work on automating all the more mundane tasks. This includes your invoicing – the more clients you have, the better off you’ll be automating your invoicing.

Many small business owners will simply use Word or Excel invoice templates in order to make their invoicing go faster. While this does provide a lot of help, especially since you won’t have to do anything from scratch, there is another option.

Online invoicing software or retail management software, depending on your specific needs, will help you to create detailed, professional invoices in a much faster time and with much less effort. The important thing to remember about that is the world ‘online.’ Because everything is done on the cloud, there’s no need to download and install any software on your computer.

As all your client data is saved on the cloud, you can do your invoicing from anywhere—as long as you have an internet connection. Even better, you can add more users to help you with invoicing and even do recurring invoicing, by which you can really just set it and forget it.

Whatever you do, you should try to automate and remove as many daily tasks from your list as possible.

Send invoices ASAP

This may not be the most groundbreaking invoicing strategy, but sending out your invoices as soon as possible will be the difference between an on-time and a late payment.

Depending on your business, this step may be the most important one or the least. If you sell a single toothbrush to some fellow down the street, sure invoicing doesn’t have to be a priority.

Where invoicing plays a crucial part is when dealing with larger scale clients and payments that may not always come to you upfront. Here is where sending invoices right away can make or break you.

When dealing with other businesses, most of them will probably have their own accounts payable departments, and those have their own cycles and processing times. If you send out your invoices late, you may end up missing the cycle and have your invoice payments delayed for another 30 days.

You should fix this by creating your invoices right after you’ve delivered your goods or services. And even better, you should begin to create each invoice before you’ve delivered your goods or services. This can be done by filling in the general details (which you probably know in advance) and then just filling out the rest when you’re ready to submit the invoice.

Use clear, detailed language

An invoice is a legally-binding document (after both parties have agreed to it), it doesn’t mean that you need to use complicated language when creating it.

One of the biggest reasons that invoice get delayed in clients’ accounts payable processes is because there is an unclear language that can create complications.

This may just cause your invoice to get pushed to the back of the pile while other invoices are worked on. Simpler invoices that are easy to understand maybe tackled first by your client.

Only a few days or a few weeks later do you get a notice that there’s been an error. This can be avoided by making sure that you have included all the necessary details on the invoice is clear, easy to understand language.

Also, include the necessary details, such as bank information, job description, and important payment information.

Add overdue fees

An inescapable invoicing strategy would be to provide an incentive for your clients to pay their invoices faster. This may just inspire the clientele you’re dealing with to pay up and avoid a penalty.

Set your invoice due date to 15 days rather than the standard 30 days, as payers are on average 2 weeks late. Consider adding a certain amount to the invoice for any payments you receive after the due date.

You can make your late payment charges gradually so that one is added after the due date, then the next charge is applied after 30 days, and so on. You can also apply a percentage, which is more common.

For yourself, you should add a condition in your policies that you will also pay a penalty (in the form of a discount for the client) if you deliver the goods late. This is, of course, optional, but it is a good way to be fair to your client.

Send polite reminders

One of the biggest inconveniences for any business owner is chasing down their clients for the payment. While uncomfortable, you need to do this. Failing to do so could to very late invoices payments and reduced cash flow for your business.

One thing to realize is that your clients are often also busy. They may get so caught up in the daily work that they have simply forgotten about the invoice you submitted. This is why they need you to remind them.

When an eCommerce invoice is heading towards overdue status, send a polite email reminder to your clients.

However, the word ‘polite’ here is crucial. Studies have shown that by using ‘please’ and ‘thank you, clients are more likely to pay their late invoices than without these words.

Follow-up with a call

There may come a time when your client may play hooky and not respond to any of the email reminders. In this day and age being away from a device that lets you check email won’t happen too often. There may be something wrong. Perhaps it’s time to take on a more personal approach and make a phone call.

The rules here still apply: you should be polite and professional in all your communications. While that is true, you can also be direct at the same time. With a phone call and a direct conversation, your client will have less chance to beat around the bush. This will allow you to begin negotiating a concrete date he or she can make the payment.

The best-invoicing strategy is one that incorporates all these eight steps. However, even doing one will be beneficial for your invoices. The more active you are in your invoicing, the faster clients clear your invoices. You will also have better cash flow this way. And with that, you’ll be able to invest more time and energy into growing your business. Just keep in mind, depending on who you’re doing business with, how you approach invoicing may not always be the same.



Author Bio

Uwe is the founder of online invoicing software InvoiceBerry. He is an expert in the small business and freelancing space. He has 15 years experience in the online advertisement and online business software fields. In his free time, he contributes his marketing knowledge to the EvergreenFeed blog.

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