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And online tools that can help!

As we research topics that could be interest to our clients, we do occasionally come across something that really makes us think. Only a few days ago, we came across a post from October 2014 that we could relate to and, we are sure, so can many of our customers.

Time is of the essence

Tempus fugit (time flies), as the famous Latin saying goes and it is certainly true when it comes invoicing for the work completed by business on behalf of other businesses.

Increasingly, small and online businesses are realising the potential of email their invoices to companies, ready for payment. Some larger businesses, perhaps more cumbersome and lumbering in their accounting procedures, may send out paper invoices. Before this paper invoice is generated and mailed to clients, the hoops that have been jumped through and the swings that have been swung in order to generate it will have been fairly gargantuan.

Keeping track of these paper invoices can be an entirely separate task in itself and, in larger organisations, it is. Once one section has produced the invoice, another section within accounting is responsible for chasing and securing payment. For corporations, this is a huge task…

The 30, 60 or 90 day rule that could be preventing businesses from growing

But, it is not just the time spent in chasing payments that is the issue here; for suppliers, there is a far more pressing concern. How many times have you completed work for someone, submitted your invoice only to be told that the company has a 30, 60 or, worse still, a 90 day payment window?

Although irritating, these payment windows and slow payments from companies have never really been challenged… until now and it is the power of cloud based accounting that is really beginning to push the boundaries of what is an acceptable time lapse between submitting an invoice and being paid.

What is an acceptable time frame between invoice and payment? The answer is… there isn’t. In order for commerce to flow, and for small businesses to manage their cash flow (as well as the larger organisations too), the time has come to kick the 30, 60 or 90 payment period in to touch.

Cloud based invoicing, claim some experts, is introducing transparency, ease of administration and speed to both invoicing and payments, excellent news for the small and local businesses out there trying to manage a cash flow.

A cruel reality

Running a business is about taking a degree of acceptable risk; someone likes your products or services. You may charge a small deposit but, in most cases, businesses will complete the work before payment.

The invoice is submitted and then you must wait… and wait… and possibly wait a little longer. In all this time, you are attempting to manage a cash flow that may have dwindled to nothing, or very little. Late payments, the cruel reality in many a case, are responsible for driving many businesses to the wall.

And, if you think it only affects you, think again. One global insurance company estimates that there is around $2 trillion locked into late payments at any one time across the globe.

And the solution is…

As well-being clear about YOUR payment terms – payment due on receipt is a nice way of saying ‘pay now’ – there are other tricks too…

Discounts – before you all faint at such a ridiculous suggestion, experts suggest turning the ‘fines’ for late payments on its head. Include a payment fee, they suggest, on the invoice amount (adding 20% for example) but, if payment is received within xx number of days (you set the time), this 20% is automatically deducted.
Get a 3^rd party to do it… and chase – some businesses are also realising that investing in their cash flow is important and thus, outsource their invoicing and chasing payments to a third company. For those of us who ‘hate asking for money’, this is a perfect way of completing the transaction.

Cloud computing – does it have the answer?

The crux of the article from 2014 was simple; a clever chap had realised that the issue lay in not only generating invoices, but keeping track of them and speeding up the whole process. At the time, he was working for the Danish Government, who generated thousands of invoices per year as well as paying thousands of invoicing per year to suppliers, large and small.

Developing an online system, he not only made the whole payment system faster and more transparent, but doing business with government departments became a far easier process; local, smaller suppliers felt more confident doing business with departments, and working on larger projects too, for payment was easier and quicker to come by.

Invoicing software – generate invoices and track payments

Running a business is hard enough without worrying about generating the right invoices for the right people for the right amount… and keeping tabs on who has paid and who hasn’t. Larger businesses create their own system and for the smaller business, short on time and skills, there are many online invoicing systems that are just right for your business; some are paid for and some are free.

However, type in accounting or invoicing software and you will have a plethora of apps and programs to choose from. Your invoices and money are important, thus the issue of trust is important when it comes to such things, so exactly how do you make your choice?

Subscriptions and size

Many online invoicing systems offer a subscription service by which you buy ‘enough’ invoicing capacity for your business; this works especially well for businesses who may not generate many invoices within a monthly period, enabling you to keep costs down. The dashboard of the online application should be easy to use, self-explanatory and, if possible, offer you the features that are not superfluous to requirements. In other words, make sure it does everything you want without the fancy (expensive) extras.

For example, if you have recurring payments or send out invoices in batches, does the program offer this ability?

Security

Just like accessing your bank account online, the security for any online invoicing app should be at a high level. Also called ‘bank level security’, there should be three factors that are apparent (but you may need to read the small print to find them!):

Encryption – data needs to be encrypted to prevent it being useful to hackers
Bank level security – as we have already mentioned, any online app you use, especially where you are creating links to bank accounts or online payment systems such as PayPal should have the highest level of security
Redundancy – this refers to the storage of your data by the provider; in most cases, there will be two server sites, one a replica of the other. Should the system be hacked or compromised due to weather and other natural disasters, you should be able to still access your mirrored data from the ‘other’ site.

Billing

These invoicing apps can also be used as a billing gateway; in other words, your customer receives the invoice and they pay via online means. Again, such sites need to have all the security and data encryption expected, as you customers will expect this too. Look for online solutions that off you a range of payment gateways that are popular, such as PayPal and Google Checkout. If your online business operates globally, the more options you have for payment the better.

However, there are processing fees – either on a per transaction basis or a monthly one – from some payment providers, which can seriously cut into your profit margins. Check these fees carefully.

Ease of use

A common issue with many services of this ilk is the fact that using them requires a PhD in in Mathematical Computing. If they offer a free trial – as most online software programs do – why not opt for a dummy run, to see how easy it is to use, as well as whether the program suits your business? Many of these software programs offer brilliant features which you don’t realise how useful they are until you have them – for example, tracking sales and payments are two essential components of keeping tabs on the financial health of your business.

Scalability

You may be expecting your business to grow in the coming months and that is all fine and dandy… until you realise the online program you have been using will not scale up with your business and you are back to square one.

Those that offer a modular approach work really well; buying more chunks as you need them, as well as add-ons are a perfect of scaling up, without having to buy the ultimate package.

And finally…

Help and support are two key components of online invoicing and financial tracking programs. Many of these apps offer instant chat options, perfect if you have a quick question or query. Email support is also invaluable but, sometimes, there is no compensation for having a telephone chat…

Time does truly fly.

We’ve all seen the usual photos of friend’s children, scrubbed clean after the summer holidays ready for the new school term, posted on Facebook in crisp clean uniforms, with comments underneath that usually say something along the lines of, “where has the time gone?!”

But, time flying past can have a serious consequence; if a project is bleeding time, you are losing money…

Bleeding time?!

Sounds painful and unnecessary but when we say this we mean effectively undercharging for the amount of time you spend on a project. In fact, it can be quite a wake up call. Especially when you come across a program that can link what you input on the timesheet with creating an accurate invoice…

However, like most things, the internet has the answer; there are a plethora of applications and software that can effectively and efficiently track the amount of time you spend on a project.

How do you charge for your time?

Go on, admit it! You hazard a guess and, at best, hope that it hits the mark. You probably don’t bother re-negotiating for the odd few minutes here and there of the over time you do but, if you can see the project running and running you will, hopefully, re-negotiate a better deal.

If you are a one-man band, this may be OK-ish; when problems can become apparent is when it comes to leaking time (and therefore, money) is when you have a team of people working on various projects at once.

Which is why you may need one of the many online applications or programs to help you note the amount of time each employee spend on each project or assignment.

The cloud computing options

Remember our article on cloud computing? Well this is a great way of investing in programs that do not need downloading or expensive updates. These time sheet type applications can be free but other charge a monthly fee for their use.

Of course, as with all things, you need to research each of these applications thoroughly, checking that what they offer for the price you can afford is something useful; don’t be bamboozled into spending money you don’t have!

Likewise, as with all cloud applications etc., check out the security too; online reviews are a great place to start for which timesheet programs could be a contender for your business.

Some ideas…

There are some great online timesheets that can function from a basic timesheet, to setting up projects so that more than one employee can input their time for each project. This way you can see what time is being spent on each portion of a project; you can then adjust your quotation system but also assess if there are some aspects that can be streamlined to make them flow quicker.

We’ve come across some great applications, all with varying degrees of complexities including Basecamp www.basecamp.com and Timegenie www.thetimegenie.com

One application that we find useful is Toggl. Not only do you complete timesheet per project but they can also be used to create invoices – meaning you streaming the amount of time spent on creating invoices – take a look https://www.toggl.com/tour/web

Who could Toggl be useful for?

Anybody who charges by a ‘time unit’ and is intended for anyone who wants an overview of time spent on projects. It bills itself as an easy-to-use programme that can be up and running within minutes.

They draw their customers from across a wide sectors of industry and from across the globe, including consultants, book-keepers, designers, students for example and they also say they have small to large businesses using their application too – from charities, not-for-profit organisations to big, global companies.

Security and reliability

We have all, however, been in that dreadful position when we have tried to use an online program to complete a simple, yet essential task only to find that we are attempting to do so when there is essential maintenance or a glitch in the system.

So when checking for security and reliability with any cloud service is that they are duplicated and backed up – so if the night time cleaner inadvertently pulls the plug, your important data is not lost.

You will also find, like Toggl does, that cloud services talk about ‘uptime’ and you are looking for a high percentage of time – Toggl say they have an uptime of 99.9%, with data backed up every 12 hours, as well as being encrypted and stored in several separate locations. All in all, it seems that they take security and reliability seriously.

Should you pay? Or is free good enough?

Depending on what you want to use the service force, and how complex you need the functions to be, there may be a charge but, in all honesty, the majority of cloud services such as timesheet and connected invoicing are reasonable.

You will also find that many of these application and programs reel you in with a 30 day free trial for example but look out for…

Contracts, termination fees and the like which may mean that once signed up, you are tied in for months…
There are discounts available with many of these online services, such as for charities, not for profit organisations, students etc. as well as for larger companies
As easy as they say they are to use, you may struggle with some features – what is the support like? Is there a cost to this?
Many are run from countries across the globe – if you are on a different time zone, how does support work then? It will be no good if you have a burning question but it can’t be answered as the sun’s not up in America yet…
Synchronicity is great too and so you may want to check if you can access it or have updates etc. across the range of technology you use

Is it for you?

It could be and with a bit of research and some tome spent getting to know the program, you could find that you actually charge for the time spent on a project!

invoicing