Are you frustrated with constantly chasing up late invoices? It’s one of the most challenging parts of owning a construction company, as it slows down your recordkeeping.
If invoices aren’t paid on time, you can be left delayed when it comes to paying staff wages, making outgoing payments, or starting new projects.
If you need to improve your construction billing, there are a few things you can do to streamline the process. To learn more, please keep reading to find five best practice techniques for improving your billing processes.
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Hire a Bookkeeper
The first step to streamlining the billing process, if you haven’t already, is to hire an accountant. Even tiny construction companies need a bookkeeper to help stay on top of finances and billing.
Bookkeeper rates are around $15 to $60 an hour, and many are able to work from home—useful if you don’t yet have dedicated office space for the business.
Bill at the Same Time Each Month
It’s a good idea to send your construction invoice to each client at the same time per week or month. That way, you can do all of your invoices on the same day, reducing the risk of forgetting one.
If you have repeat clients, billing at the same time each month also helps them know when to expect the invoice.
Invest in Billing Software
You definitely need billing software for your construction company. This will help you with taxes, managing ingoing and outgoing payments, and seeing which invoices are late.
There are plenty of low-cost billing systems, so it doesn’t need to be a huge expense.
Send Follow-Ups
Unfortunately, some clients just don’t pay on time. This can be accidental or intentional, but either way, it leaves you waiting for major payments that your business is depending on.
If you want your invoices to get paid, make sure your company has a system in place to send follow-up invoices. When clients aren’t paying, follow-up invoices often remind them that they need to get it done.
You may also want to have a staff member call each business that is late in paying, with a friendly reminder phone call that payment is overdue.
Add Late Penalties
If you’re worried about companies not paying, it’s a great idea to add on a late penalty to each invoice. Let clients know the terms of the invoice—usually 30 or 60 days.
Should payment not be received within that time frame, a late penalty, such as 10% of the cost, will be added on. No one likes to pay more than they need to, so the threat of a late penalty often motivates clients to pay on time.
Use These Tips to Improve Your Construction Billing
Don’t spend more time on company administration than you need to. Instead, use these construction billing tips to improve your company’s invoicing.
A regular cash flow is essential for every business, especially if you’re depending on it to pay staff. With the right billing practices, invoicing will be efficient and simple.
Did you find this article helpful? If so, we encourage you to keep reading for more advice.