Professional services organizations (PSOs) manage a great deal of complexity to deliver successful projects on time and within scope, and they deserve payment for completed jobs. Many PSOs, however, fail to fully complete the final stage of their projects: the billing. Because they’re moving fast to please customers, they often overlook the finer details of billing, which leads to inaccurate invoices, late billing, and a rise in write-offs. The good news is this: if your billing is set up correctly and done quickly, you can drastically reduce your write-offs.
In this post, we provide several tips for setting up and performing billing so as to incur as few write-offs as possible.
Integrate Your Project Management and Billing Workflows
If you bill as soon as possible following the completion of a project or project milestone, you raise the likelihood of getting paid. You cannot bill quickly when your project management and financial systems are not integrated, however; instead, project managers must sift through spreadsheets to determine hours worked, related expenses, varied rates, and other factors to calculate the total amount due. But even then, they’re not done – the information must go to the billing department for invoicing. Manually tracking data and the handoff from one department to another lead to errors as well as a time lag, and if an invoice has errors, chances are it won’t be paid. And, if it arrives late, the customer is unlikely to treat it with urgency.
Integrating project management and financial systems makes invoices easier for customers to understand, decreasing the likelihood of their disputing the bill. For example, rather than the billing department sending an invoice that merely lists the name of the project milestone and the payment due, sharing information between project management and billing allows you to include more context. Now, your invoices reflect the details of the amount due, such as fixed and variable fees, hourly rate breakdowns, time & expenses, geographical differences or exceptions, and more.
Invoicing Tips: Below are several data elements that the project management system can automatically populate into your invoices to increase the likelihood of getting paid (and paid on time):
• Include the payment terms. (This raises the likelihood of on-time payment by 50%.)
• Don’t include more than four names on the invoice. (This doubles the odds of non-payment.)
• Add a company logo. (This triples the likelihood of receiving payment.)
• Include the due date. (This increases on-time payment odds by eight times.)
Automate Data Flows
Automating information flows between project management and billing enables the entire process to occur faster; with shared project data, including contract and deliverable details, collaboration with your customers is streamlined. Examples of automation include the following:
• Establishing recurring billing to automatically charge recurring fees
• Creating overdue invoice reminders
• Producing invoices that reflect mid-stream contract changes or project exceptions
The steps required to optimize your billing and minimize write-offs aren’t complicated – the first step is using a modern project management system that integrates with your financial management system. From there, your company can automate invoicing quickly and accurately to encourage your customers to pay on time.
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TimeLinx delivers innovative project & service management software as a complete solution that perfects the sell-track-manage-support-bill cycle that services organizations must have to delight their customers; TimeLinx brings the cycle together in a single application that offers less frustration, better project management, complete reporting, and improved profitability – all specially designed for Infor and Sage.