Why Outsource Your Billing?
While outsourced billing services are pretty common in the medical field, most businesses would never dream of outsourcing their invoicing to a third-party provider. Entrepreneurs, especially, think to themselves, “shouldn’t I know what is going on in my business?” And because billing is such a sensitive issue with clients, they feel like they should handle this issue themselves. However, those same entrepreneurs often find themselves trying to generate invoices in the middle of the night or on weekends because they are so busy actually building their business that they never seem to find the time to get the bills out to clients.
This can result in a cash flow crunch pretty quickly.
We work with a number of consultants, advisors and other providers of important business services who often find themselves realizing that they are woefully behind on billing their clients. December especially can be frenzied as often, clients want to get your invoice and pay it before the end of the year to accrue that expense in the current year.
As a result of this billing backlog, after a few busy months, entrepreneurs can find themselves wondering why they are working so hard but not getting paid for their offerings. But when you don’t bill your clients on-time, you certainly can’t expect them to pay on-time, either.
Adding an outsourced billing service can ensure that your invoices always go out on the designated day of the month, and that someone is aware when payments don’t come in, so you can trigger follow-up and reminders.
Related Post: Why Hire a Bookkeeper?
Keep Your Focus on Growing Your Business
There’s a reason that billing is often late – because entrepreneurs live and breathe to grow their business. Client demands, product development, networking, and marketing your business are always the priority. And if you DO take on the operational stuff – like client billing/accounts receivable – you’ll likely be doing it on nights and weekends, eating into the family and down time everybody needs to stay balanced and avoid burnout.
With a billing consultant, you can be sure that your payments are going out on time, and consistently, without eating into important work or personal time.
Maintain Your Relationships
There will absolutely come a time when you need to follow up with a client or customer because you have not received payment. Often, entrepreneurs put this task off because the relationships with these clients are the lifeblood of you company’s growth. The good news is that a third-party can do this on your behalf – and can do it regularly. This way, the customer’s experience with you and key staff are all about the work you are doing on their behalf, and you can keep uncomfortable conversations about later payments separate.
Your billing consultant will also have much more insight and ability to see trends in your clients’ payment habits. If a certain client regularly pays late, you can determine whether it makes sense to offer them incentives to pay their invoice upon receipt.
We recently worked with a client to balance how many customers were delinquent vs. how much they were paying in credit card fees. This allowed the CEO to make some choices about incentives for clients who pay by check, convenience fees for customers who use credit cards, and the trends around which customers pay late and how to build in incentives to pay on-time.
With everything else on entrepreneur's plates, they often just can't see the trends – but with insight from a third-party billing consultant, they are often able to make some great business decisions that improve cash flow. And they can free up time to work on the business and have a personal life.
And for more insight on cash flow, check out this great article from Entrepreneur Magazine: 4 Steps to Help You Manage Your Operational Cash Flow.
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