How to Improve Your Billing Process

The billing process is a vital function for any business, yet many fail to do it efficiently. The process starts with creating an invoice and is complete once a payment has been received. This sounds simple enough, however there are many challenges that can make the process more complicated than you may think.

In this blog, we’ll help you understand the impact a poor billing process can have and how you can improve it so your business and customers have the smoothest experience possible.

How can bad billing processes impact your business and customers?

Unoptimised billing processes can have a serious impact on customers and businesses. Ineffective billing processes can result in financial setbacks and higher administrative expenses.

If customers are late making payments, this can disrupt your cash flow and has the potential to impact your own financial commitments you have in place. Three in five (58%) small or medium businesses in the UK are experiencing late payments from customers, based on new research from Barclays surveying 500 small business owners. Late payments can negatively impact a business’s income, which has the potential to cause cash flow instability. Xero estimates that late payments cost small UK businesses £684 million each year. The money that businesses are waiting on could prevent them from investing back into the business or hiring new staff.

A bad billing process not only impacts businesses but can also hurt customers. If a business is sending invoices that are inaccurate or hard to understand, this can infuriate customers. The last thing they want is to be presented with unexpected charges. Customers expect to be billed accurately for what they’ve purchased.

Businesses can damage their relationship with customers and even lose their custom altogether due to a poor billing experience. If customers have to spend their time trying to resolve billing errors or have a payment issue that could cause disruption to a service they are subscribed to, they’re not going to take this well. The last thing you want is your churn rate to increase due to a poor billing process. They could also leave negative feedback which could hurt future sales.

Tips to Improve Your Billing Process

Set out clear payment terms upfront

You should discuss and set the payment terms before committing to any financial agreements. These terms and policies outline how payments will be handled between both parties. It's crucial to ensure that the seller and customer have a clear understanding of the payment terms so there is no room for confusion. Having clear terms helps clients have a firm grasp of your pricing structure and payment dates.

Customers are more likely to settle their debts promptly if they're aware of the exact amount owed and when it’s due. Additionally, it's important to ascertain the preferred timing and method of payment for your clients and ensure that your current payment options are convenient for them. You may also want to communicate the repercussions of late payments to add further motivation for them to pay on time. This level of openness aids in building a long-term relationship based on trust.

Ensure data accuracy

In order to be paid the correct amount on time, the data you have needs to be accurate. If you have errors in the data you’ve collected from customers, this can cause billing delays or delayed payments which can ultimately lead to lost revenue if not rectified.

Data inaccuracies can also cause the customer to lose trust in your business if you’re overcharging them. Incorrect household bills cost UK customers up to £400 a year, with 70% being charged too much.

Our Data Cleansing Solutions ensure your data is accurate, complete and consistent, improving your billing process and increasing your collection rates. We also provide Revenue Assurance Solutions that can help you identify if your billing is accurate in order to make sure customers are paying exactly what they should be for your products and services. For a deeper understanding of revenue assurance, see our blog on What is Revenue Assurance?

Automate your invoicing process

Using automation features can speed up your billing processes, saving valuable time for both you and your customers. Billing automation goes beyond just compiling quotes automatically. Impactful automation features can enable you to:

• Implement automated systems for recurring billing, ensuring recurring fees are automatically charged
• Streamline your operations by automating reminders to customers for overdue invoices so you don’t forget
• Allows customers to make payments at their convenience using their preferred payment methods
• Generate invoices based on proposals, tracked billable time, or a combination of both, providing flexibility in your invoicing
• Manage diverse transaction scenarios by issuing sales, prepayment, and credit invoices to meet the varied needs of your business and clients

Integrate your billing software

Integrating your billing software with your accounting system can help you sync customers, products, invoices, and payments together. Doing this allows you to:

• Seamlessly link your invoices with well-known payment gateways
• Integrate your accounting software for real-time updates
• Integrate with your pipeline management system to seize every opportunity
• Ensure precise and timely billing for all financial transactions

Using our comprehensive consultancy expertise, we helped a client implement a new billing system that works across multiple countries as an end-to-end solution.

Allow payments by direct debit

Direct Debit is an automated payment method that helps customers safely pay for products and services online. Once it’s set up, the payments are taken automatically on a designated date. This increases the chances of a business receiving payments on time as the customer won’t forget to make the payment due to automated functionality of direct debit.

Send payment reminders

Sending payment reminders is essential for optimising a smooth and effective billing process in order to reduce the chances of customers failing to pay on time. By giving customers a little nudge, it increases the likelihood of them paying on time and shows that your business takes its accounts seriously.

Reminders can play a key role in cultivating positive relationships, initiating communication, and preemptively addressing potential issues before they escalate. When sending customers reminders, they can be sent by email and even by post if needed. For postal invoices, you need to make sure the customer still lives at the address you have listed. Many businesses don’t find out a change of tenancy until debt recovery has been initiated which at this stage has already resulted in significant costs.

Chase late payments

If a customer has missed a deadline for payment, you have every right to contact them about it and find out when they will pay. If you have penalties for late payments in your terms, you can bill them for this at your own discretion. About 6% of revenue owed is not collected by UK businesses resulting in an annual loss of £244 billion so it’s important to chase unpaid invoices. Our Collections Improvement Solutions improve strategies and increase your collections performance.

How can Sagacity help you improve your billing process?

Having an effective billing process is a need, not a want. All businesses need a regular flow of revenue to stay afloat so it’s vital they have a billing process that is accurate and ensures customers are able to pay what they owe on time. Get in touch with our team today to see how we can help optimise your billing process.