When is the best time to invoice clients?Written by Mindaugas on October 28, 2019
Invoicing is an integral part of business operations. It validates financial transactions and creates additional transparency between you and your client. Go ahead and invoice clients – they will appreciate the effort.
Creating invoices is easy; deciding on when is the best time to invoice clients may pose difficulties. You have to walk a fine line between “I hope I don’t come off as pushy” and “I can’t hamper the cash flow of my business.”
Fact of the matter is that there are a lot of variables at play that will affect how and when you should invoice clients.
Quoting and invoicing clients before work commences
Invoicing your client before work has even began is a valid option. Depending on the scope of a project, you may have already prepared a quote of the approximate costs pertaining to the project. Automotive or home repair, carpentry, custom art, and other similar industries typically provide clients with quotes prior to commencing work.
Invoicing platforms such as InvoiceBerry for example, can quickly convert existing quotes into ready-to-be-delivered invoices with a click of a button.
The downside of invoicing before starting work
Choosing to send an invoice before beginning work does come with a few caveats that you should consider –
1. Clients may become too involved
This scenario in particular is especially common with big-ticket projects – if they have been paid for in advance.
Paying for a project before it even starts can be a daunting experience. Even if you’re the most reputable business on the block, this can induce some anxiety for new clients.
Having clients cover the invoice in advance can get them too involved in the project. It’s always nice to have precise instruction throughout the process; however excessive client involvement leads to micromanagement and interruption. This often causes more harm than good and it can slow you down considerably.
Imagine this scenario…
Client is committed to paying a specific amount disclosed on the invoice they have received. You now begin your work – some time has passed and you notice that you have underestimated the amount owed to you for the work that has been done.
This may not be too common of an occurrence, but it does happen – this of course will vary from industry to industry.
You now have to discuss additional payments that have been accrued – a new invoice will need to be created and delivered.
Should you ask for a deposit?
Asking for a deposit or a down-payment is good way to insure yourself against non-payers and to make sure that the client is serious about hiring you. It would be a shame if after you’ve completed the required task, the client vanished without reimbursing you for your services.
Asking for a deposit may not always be necessary however. Do you have a prior relationship with this client? Were there any compensation issues that you had to deal with when working with this client? Do you have enough capital on hand to start work without a deposit? How you answer these questions may help you decide on whether or not you should take a deposit.
Before asking for deposit…
We already talked about quotes in this post. You should quote your client before asking for a deposit. This way they get a clear understanding of all potential costs associated with the project. You can then decide on what portion of the total payment you will take upfront as a deposit before work begins.
Invoicing clients after work is completed?
Sending out an invoice after the work has been completed is usually the most common invoicing approach. This method may also be evoked before a solid business relationship has formed. Though keep in mind that payment and work terms should still discussed beforehand.
Delivering an invoice right after the work is done helps you stay fresh in the client’s mind. This minimizes the chances of the recipient tossing the invoice into the drawer letting it collect dust until the due date. May even help you avoid the use of payment reminders.
Your client may be inclined to ask for various revisions or alterations to the project. Worst case scenario; he or she may choose to “kick the can down the road” extending the project and making you unable to invoice them just yet.
Invoicing per milestone
Working on large-scale projects or tasks, can tie you up with certain long-term obligations – sometimes even without the ability to work with other customers (think large-scale contract work). In this scenario, it’s a good idea to discuss with your client about the possibility to invoice them at pre-determined project milestones.
Invoicing per milestone guarantees your business access to adequate amount of cash on hand. This way you can still pay salary, utilities, or maintain equipment without the need to incur liabilities through loans while being preoccupied with this single project.
Talk to your client and mutually agree upon the desired invoicing milestones. You don’t want to create any payment confusion once you’ve committed to the project.
Should you ever wait to invoice your clients?
An uneasy feeling may wash over you when the time comes to send out the invoice. You may be thinking that waiting just a little while after the task has been completed my be a good thing – trying to not come off as desperate.
These feelings of uncertainty may be even stronger if you’ve had terrible experiences with non-paying or late paying customers. It could seem like a few sour apples spoiled the bunch and now you don’t know how to proceed with invoicing.
Fact is your business needs to get paid in order for you to keep the lights on – there is no way around it. Cash flow cannot be stifled due invoicing hesitation.
One way to circumvent some of this uncertainty is to talk to your potential client before committing. Decide on the payment terms and use invoicing software such as InvoiceBerry to automate the invoicing process. In this case you hand over the reigns to software that will simplify invoice creation and deliver process.
Which day of the week is best for invoicing?
While deciding on when to sand an invoice, does the day of the week matter? Some evidence suggests that the day on which you invoice clients can indeed have an impact on your cash flow.
Entrepreneur and self-proclaimed eCommerce geek Dejan Jacimovic has found that Tuesday, right before the start of the work day is the best time to invoice clients.
Other evidence suggests that you should send invoices on Monday, right before 8 o’clock in the morning. This way the recipient is presented with a new email of an outstanding invoice first thing in the morning, once they take a gander in their inbox.
Everywhere I looked in regards to the perfect day to invoice clients, every source has stated to never send invoices on Friday. The reason is that the invoice may get buried under all the emails that accumulate over the weekend; inbox may go unopened until Monday.
Now I don’t want to generalize the appropriate timing that one should use for their invoice delivery. The day and time you chose may also very well depend on the industry you work in and the relationship you have build with the client.
If the invoice has a rather lengthy payment deadline – sometimes ranging from 30 to 90 days – the outstanding invoice may slip the client’s mind. We are humans after all and we do forget things. Here is where payment reminders come into play.
Don’t hesitate to send reminders to anyone with an outstanding invoice – even if its before the payment deadline. That’s where invoicing software such as InvoiceBerry comes to your aid – again. You can automate the process of delivering payment reminders to tardy clients.
Include the outstanding balance as well as the agreed-upon payment terms within the payment reminder. This may prove to be incredibly useful if the client happened to misplace your invoice.
Payment deadline countdown may only start after the invoice has been issued. Once you have delivered the invoice, if you haven’t been paid after 90 days, you only have about an 18% chance of collecting that overdue payment.
Time to get invoicing
Hopefully after reading this post, you were able to get acquainted with how to improve invoice timing for better sustained cash flow. Don’t be afraid to talk to your clients and discuss payment terms and potential invoicing methods – it’s a two-way road.