You would be compensated immediately for your labor in a perfect world. When you finish the job, money will mysteriously appear in your bank account without any paperwork.
Unfortunately, that reality is not the one we inhabit. Businesses have struggled (and worked) with paper invoices for many years. However, these days, contractors are doing away with carbon copies in favor of a new invoice that uses their cell phones, tablets, and mobile apps.
Everyone in the company wants to be paid, but no one like creating invoices, which is a universal business truth.
You are not performing the task when you work for your firm as a contractor. But for any contracting business, sending invoices for services rendered is an essential component of financial accounting.
You presumably juggle numerous projects with various billing conditions, deadlines, and invoice information. Establishing a method that keeps track of everything from the outset of the task is crucial.
If an independent contractor knows a project will consist of some smaller billable jobs, they may even begin a new invoice at the beginning of the project. As a result, nothing is left out at the end, and the invoice is ready to be submitted as soon as the service is finished.
It’s simple to understand why if you enjoy working as a contractor.
You deal with various clients, which keeps things exciting and offers different sources of revenue, and you do work that you enjoy.
Contracting, however, is a business. Invoice your clients so you can track what has been paid, what is overdue, and what needs to be followed up on right now. Being a smaller company, you must also be able to complete the task quickly—or, even better, automatically.
Knowing when to deliver the invoice to your customers is crucial when doing business with them. If you wait too long, you can experience cash flow issues. You could get into trouble if you speak to the client too quickly.
When Do You Need To Use Invoice?
1. You Have Problems With Lengthy Contract Cycles
Is your contract cycle completed in a week or more? That can put stress on your business and reduce your financial flow.
Paper invoices may significantly influence your slow sale cycle. For instance, it can take you hours or even a whole day to bring your invoices back to the office if you’re a contractor making service calls to numerous homes. This delay is a factor in your sluggish sales cycle.
Thanks to a construction invoice app, the same plumber might issue an invoice immediately following his house visit. His form is directly made available on the cloud after being filed. As a result, your billing department has real-time access to his work, and you can email the invoice to your client.
An invoice app for contractors can demonstrate measurable outcomes: One of our clients was able to cut their sales cycle in half, from 17 to just three days.
2. You Sent Inaccurate Quotes
Making mistakes isn’t a huge problem, in theory. They may have adverse effects on enterprises in the real world. The math error will affect your bottom line if you send a lowball quote. If you send a too hefty quote, you risk having an irate client on the phone with you. Whatever the case, these errors damage your company.
The computations can be completed within an invoice app. For example, your employee would fill up the parts utilized or the hours worked. The app will total the fee. If you choose an invoice app, you may rest easy knowing that your invoices are always accurate.
3. You Misplaced The Bills.
This one may be challenging to see. You might be able to view all the bills you’re sending out due to the numerous employees you have and the many work orders or service tickets that might be returning to your office. How many, though, might you be losing?
They are not the only business that has trouble keeping track of paper forms; according to PWC, 11% of paperwork is lost or filed incorrectly. You can lose out on many crucial billing chances if you only use paper forms for billing.
4. Your Consumers Cannot Read The Carbon Copy.
Customers desire to comprehend their invoices before making a payment. With carbon copies or ambiguous line items, that can be challenging. You must spend an hour on the phone outlining the invoice rather than receiving a rapid response.
You may send uniformed invoices every time by switching to an invoicing app. Your consumers will appreciate the legible writing, understandable descriptions, precise calculations, and even images of the completed work for additional clarification. Your customers will be able to comprehend all the job as soon as it enters their inboxes, saving them from spending hours on the phone.
5. A Lot Of Filing Cabinets Fill Your Office
These filing cabinets not only take up little workplace space but also cost you money. One filing cabinet may set you back $2,000 a year! How many are there? Businesses claim that 35% of their workplace space is taken up with paper. That represents a rising storage expense.
You can do away with the requirement for paper forms by using an invoice app. Everything is sent directly to the cloud. You can reclaim your workplace space and benefit from higher profits.
6. You’ve Been Entering Data For Hours.
All of us have been required to write up the data once. You must then enter the information again for your accounting databases. With this redundant task, you will spend more time and have more room for error. You might have one employee whose sole responsibility is to enter data. In either case, you must enter data for thousands of hours to receive your bills. You’re spending thousands of dollars on it, and it’s slow and error-prone.
7. Your Clients Request Multiple Copies
How frequently does this scenario occur? You send a customer an invoice, and they wait. You then wait. After two weeks, you call. But they either never received it or lost it. Therefore, you must locate the invoice, send it once more, and wait. Your selling cycle lengthens and involves more work with follow-up and additional invoicing.
An invoice can be lost in your office or home just as quickly as it can be lost between your automobile and the office. It’s not your fault or that of your client; paper is just prone to fail.
An invoicing software might lessen your workload by making it simple for your client to maintain organization. You don’t need to spend a half-hour searching for the invoice in the cloud. You can send a new copy of the invoice by email without using the postal service or a fax machine.
Tips to Avoid Common Errors in Contractor Invoices
1. Don’t Forget to Keep Hourly Records
You must have a system in place to keep track of the number of hours you put in for each client right from the start of your first assignment. The entries in a diary do count. Alternatively, you might use billing software with a timer feature. Whatever you choose to do, make sure your records are accurate. If not, it is impossible to provide correct invoices. Keep track of your start and end times as well as your actions. In every case.
2. Send That Invoice Right Now.
You can stay better organized if you send your invoice to clients as soon as you finish the service. Because you issued the invoice immediately, it conveys to your clients that you value timely payments.
Processing your invoice moves up the list since the client is focused on the just finished task and is, therefore, more likely to do so.
3. Share Your Terms of Payment
A step in the onboarding process is discussing the terms and conditions. It doesn’t hurt to reiterate the payment terms on your invoice. This is merely a kind reminder that they previously consented to them when they signed your contract at the beginning of the service.
4. Chase Overdue Bills
Don’t wait a month to begin pursuing a past-due bill. Send a first nudge note as soon as the payment deadline has passed. Just a kind reminder of the past-due sums and how to make a payment. Indeed, people do occasionally forget. Then, until you receive compensation, follow up with every successive follow-up in a polite but thorough manner. To succeed, you must move quickly.
5. Keeping Things Orderly for Tax Season
Invoicing contractors is about more than just keeping the money. It also involves taking care of your tax duties.
Your financial records primarily consist of your invoices, which is why they must be correct. They can support your self-employment income tax declaration. You may satisfy your obligation to pay for healthcare, social security, and income taxes by constantly keeping an eye on your revenue, business expenses, and tax deductions. One way to accomplish this in your company is through expert invoices.
Companies are saving hundreds of hours a year because to invoice applications. They benefit from quicker sales cycles, more precise quotations, fewer administrative expenses, and superior customer service. An invoice app can be the answer if you’re sick of entering data or looking for lost invoices. Better still? The bottom line will be more vital for you.