It can seem simple: you provide a service, request compensation, and your customer pays you. In very basic terms, that’s the customer billing process.
So what’s there to improve?
Actually, there’s plenty of room for improvement. As service providers, it’s a question of when and not if you’ll encounter problems in the billing process.
And when you eventually resolve the problem, you’ll want to know what to do so the same thing doesn’t happen again—for the sake of you and your customers.
Therefore, in the following sections, we’ll explore useful ways to improve your customer billing process. Let’s start!
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What’s the easiest way to uncover if there’s a fault in your billing process? Sometimes the most obvious answer is the best one—ask your customers.
Getting feedback is invaluable for taking the first steps in improving your customer billing process. After all, customers are the ones using it, so it’s safe to assume they have some thoughts about it.
By collecting feedback, you’re actually tracking customer metrics that can tell you a lot about customer satisfaction and the efficiency of your billing process.
And when those metrics start to point to some specific conclusions, you’ll know exactly what to improve.
One good way to get the data for those sweet, sweet metrics is by using surveys. Here are some tips for customer surveys anyone would be happy to fill out.
Creating a survey that your customers won’t just consign to the trash folder can be tricky. So, to begin with, it’s a good idea to devise an intriguing subject line since that’s the first thing customers will see in their inbox.
For example, Delighted has a few pieces of advice on how to create an effective subject line.
- keeping it short
- being creative and conveying emotion
- being personal
- offering an incentive
- emphasizing urgency
- avoiding spam words
- asking questions
Of course, you won’t be able to cram all of that in a single subject line, but these are some good pointers to keep in mind.
Considering that the response rate for e-mail surveys is 30%, according to data compiled by SurveyAnyplace, it’s not a bad idea to try to increase it.
When it comes to the survey itself, you should keep it short, precise, and relevant to the billing process.
One way to keep it brief and engaging is to include a Likert scale. A Likert scale presents the reader with statements and a scale from “strongly agree” to “strongly disagree”, or some version of it, like this one:
Here’s another example of a billing feedback survey suitable for hospital use. As you can see, you can have multiple questions about the experience and the survey still won’t take a long time to complete.
When asking questions, don’t beat around the bush. Tori Smith, a PR expert at Communicate, agrees.
Once you get some results from your well-crafted billing-related survey, you can start polishing the detected friction points in your customer billing process. A good start is revisiting your billing cycle.
A billing cycle, simply put, refers to when you send your invoices to customers. Revisiting your billing cycle can make a big difference in your customers’ satisfaction and your cash flow.
For example, depending on your business, you can invoice your customers right after the job is done, or you may set up regular intervals for invoicing.
While the first option is perfectly suitable, especially if you’re dealing with a one-time arrangement, it can be complicated and inefficient to invoice every client over and over.
In addition, that way, it’s hard to predict your cash flow in a particular time frame.
The other option is to invoice at regular intervals. That’s suitable for recurring orders or arrangements, big projects, subscriptions, or memberships—basically, for any type of client that stays with you.
Your clients probably already have dates when they handle invoices, such as the 1st and 15th of the month. You can communicate with them and arrange something that benefits you both, whether it’s weekly, biweekly or monthly invoicing.
That way, you can plan your cash flow and be sure that you’re maximizing the chances of invoices being paid quickly. It also helps automate the invoicing process, which we’ll tackle in a later section.
In addition to that, it’s a good idea to keep in mind that customers have payment cycles of their own. So, whenever you choose to send your invoices, be consistent and always send them at the same time.
An analysis by the software Vistr might shine some light on optimal times for sending invoices. They advise that, if you send invoices weekly or biweekly, you do it on weekends.
Chances are you will get paid ten days faster than you would if you sent them during the week.
Those who prefer invoicing on a monthly basis should consider doing so on the 1st. They were paid eight days sooner than invoices sent on the 30th.
The point is, try to find common ground with your customers and see what sort of billing practices work and what don’t.
If a customer glances at your invoice and can’t immediately see what it is, who sent it, and what to do about it, it’s time to review your invoice design.
The design of your invoice can be simple or elaborate, traditional or modern, but the key thing is to have all the necessary elements for payment.
When the customer opens your invoice, it shouldn’t be difficult to find its basic elements, such as:
- The invoice number and date
- Sellers information
- Customer’s information
- Description of the charge
- Quantity and price
- Taxes and discounts
- Terms and conditions
You can find a breakdown of those and other elements you can include in your invoice here.
One additional element worth considering is your business logo.
You most likely already have it on hand and it’s easy to include in the invoice. The benefits are substantial—you’re three times more likely to get paid than without it.
Including all the necessary information radiates professionalism, and that’s the impression you want to leave—and what customers want too. If you send an invoice that lacks crucial information, it’s not difficult to imagine what image that projects of you and your organization.
Besides having all the needed information on the invoice, colors can play their part too when it comes to looking professional; they have deeply ingrained meanings and associations.
For example, green indicates wealth and stability, and blue represents professionalism, among other meanings. Of course, that does not mean that you can’t have red or purple on your invoice.
However, most of the invoices customers receive stick to the basics. There’s nothing wrong with that, but with some creative spark, it’s easy to stand out, like the following example shows.
If you feel like that’s too much for your preferences, you could opt for a more discreet yet still eye-catching option, like this one:
Design can be fantastic, but it won’t do much good if you forget to provide relevant information for your customer, so always have that in mind first.
And while you are reviewing your invoice design, consider including a QR code on it. It can be an efficient way to improve your customer billing process.
A QR code reduces the chances of filling in the wrong information, and it’s simple and fast. You can hardly beat something that allows you to pay with one or two clicks. Here’s what an invoice with a QR code can look like.
Source: IRIS GST
There are plenty of possibilities for designing your invoice. To improve your customer billing process, be sure to provide them with everything they need to quickly and efficiently complete the payment.
Your Terms and Conditions shape the entire billing process, so it’s important to define them properly and on time.
The first step is to put them in your invoice. Entrepreneur magazine reports that if you list the terms in your invoice, you’re 1.5 times more likely to get paid on time.
However, presenting your terms and conditions in inaccessible accounting jargon won’t make a big impact.
Instead, use simple, straightforward words and phrases so that the customer doesn’t need an accounting dictionary to decipher them.
For example, if you put “payment due EOM” in your terms, not everybody will know right off the bat that “EOM” means “End of Month”.
There are other terms like Net 30, which means the customer is to pay within 30 days after the invoice date, or 2/5 Net 7, which stands for “pay within five days and get 2% discount”.
It’s simpler and more transparent for your customer if you just spell out the whole sentence.
You can see that in the example above; short, clear, and leaving nothing to interpretation.
Another way to simplify the language is to be clear about the due date for payment.
Due date is not even included in 25 percent of invoices, according to Entrepreneur magazine.
That’s a problem because by omitting the due date, you’re as good as giving your customers permission to pay you whenever they want, if at all.
Besides that, you significantly reduce control over your cash flow, as well as the chances to be paid on time.
Consider this—if you put the due date in your invoice, you’re eight times more likely to get paid on time. So there’s really no reason not to include it.
How much wording influences payments is clear from research by Freshbooks. They analyzed how using specific keywords influences payment.
Unsurprisingly, they found that it’s important to be polite to your customers. Writing “please” and “thank you” in the terms nudged customers to pay faster.
Do you know what else turned out to be effective in speeding up the process? Shortening the due date.
It turned out that putting “7 days” as a due date in terms was way more effective than “14 days” and especially “30 days”.
Using simple language in your terms and conditions ensures that your customer billing process goes smoothly. Wordy and technical terms create confusion, which can translate into an unnecessarily complicated experience.
Automating the billing process saves you time and resources and treats your customers to an error-free, consistent experience.
If you’re wondering why automate, consider this: research shows that 61% of late payments are late due to incorrect invoices. In other words, if customers are late on payments, it may not even be their fault.
When you do repetitive, and, let’s be honest, boring tasks like writing and sending invoices, mistakes are just waiting to happen. And that can make improving your customer billing process a lot harder.
That’s why you should automate your billing process as much as possible.
Good billing software like Regpack can get a lot of the more tedious aspects of the billing process right off your shoulders.
For example, it has all the features needed to collect and store payment details, customize recurring payment schedules for your customers, create and manage automatic payment schedules, and much more.
Letting the software do its thing frees up a lot of time, and there are cashflow benefits too. After implementing the automated billing system, Regpack clients reported a 75% decrease in non-payment, 25% improvement in cash flow, and a 35% increase in payment rate.
Imagine being able to set up a system that creates and sends regularly scheduled, error-free invoices to your customers, reminds them if they’re late on a payment, and processes invoices and payments.
Automatization would definitely eliminate the element of human error from the equation, and free up your time for more important tasks, wouldn’t it?
The thing is, you don’t have to imagine it. A good billing software solution can do all that and more, like allocate payments and set up discounts. You can be sure all of that will improve your customer billing process.
Offering multiple payment methods can be a great way to improve your customer billing process. In this section, we’ll discuss why and how to stay up to date with all the current payment trends.
Why is offering a variety of payment methods important?
Well, it makes your customers’ lives easier; the more options you have, the better the chances they’ll be satisfied with your services and your customer billing process.
It’s good for you too. The numbers game applies here also: the more payment options you provide, the more likely you are to get paid.
When sending invoices, be sure to cover all the usual suspects in payment methods—credit cards, debit cards, checks, digital wallets like Paypal or Alipay, and wire transfers.
Cash is difficult to give up even with all the other options. Therefore, it may be good to include it as some customers still might prefer it.
In the graph above, we can see that in 2020. digital wallets were the most popular payment method, and credit and debit cards followed.
Although this statistic is not specifically for paying invoices, it’s safe to assume that similar principles and preferences apply.
Keep in mind some specific situations too. For example, e-checks are the digital cousins of paper checks, but they’re only available in the US.
In other countries, there may be specific payment options preferred by customers from that region.
That’s just an example of how different customer preferences can depend on where they are.
Moreover, accepting multiple currencies is a given if you’re offering services in other countries.
So if you want to do business internationally, look for a solution like Regpack that provides multi-currency payment processing to save your customers the hassle of converting their money.
Diversity and simplicity in payment methods are of immense value to your customers. Don’t risk losing them just because you’re not up to date in that area.
Your customer billing process should be like a fine-tuned machine that kicks into action when it needs to.
It can be and will be if you implement the ways to improve it. We covered six important ways in this article, and all of them can be a significant factor.
Detecting possible friction points, revisiting your billing cycle, tweaking the design and language of your invoice, implementing automation and offering a plethora of payment options are all cogs in that machine called the billing process.
Give them your attention; your customers will appreciate it, and you will enjoy your business more.