Best Billing Practices for Small B2B Companies

Best billing practices for B2B businesses

Implementing effective billing practices can help your cash flow and client relationships significantly. To help you optimize your billing process, here are the top billing practices.

1. Create an effective invoice template

An invoice is more than a bill ― it details all the work you’ve done for a client during a specified time frame. It correlates this work to how much money the client owes you. It specifies payment deadlines and methods. That’s why creating an invoice template is an effective way to build all your invoices and is one of the most important billing best practices. [Related article: Guide on How to Send PayPal Invoices]

2. Deliver invoices in a reasonable time frame

Set up clear internal schedules for invoice delivery. You and your team should decide whether to bill clients at regular intervals or after the completion of each project.

If you opt for monthly payments, then automate the sending of invoices on the last business day of the month. If your invoice after each project is completed, then delegate invoice creation, submission and delivery tasks with accounting checklists to your team. You can also bill monthly for some clients and on a project basis for others.

3. Set clear payment terms

Earlier, we mentioned that part of an effective invoice template is establishing which type of client payments you accept and setting firm payment deadlines. In the payment terms section of your invoice, you’ll specify these conditions to your clients. There, you set payment schedules, such as net 30, and specify how you want your payments delivered: automated clearing house payment, check, wire transfer or something else. Without specifying the deadlines and payment methods, you could end up having an outstanding invoice if the client takes longer or doesn’t pay their bill.

4. Outline an approval process

It’s important to set up internal invoice approval workflows. For example, one of your employees might not be aware of client charges that another employee knows well.

In setting up your approval workflow, answer these questions: Who within your company needs to approve invoices? How will you verify that an invoice is accurate? How soon after invoice submission must invoices be approved and sent? With these guidelines established, you should be able to send error-free invoices on time.

5. Offer discounts for early payment

While not necessarily a requirement among billing best practices, offering discounts for early payment can help increase your cash flow. Don’t set your discounts so high that you lose money, but a 2 percent or 3 percent discount likely won’t decrease your revenue substantially.

6. Automate and digitize wherever possible

Raj Narayanaswamy, co-founder and co-CEO of employee time-tracking solution Replicon recommended that you automate billing whenever possible.

“The quickest and easiest billing is done online,” Narayanaswamy said. “Invest in an invoice/billing generation engine to automate the process and remove human error. Manual billing that relies on tracking down and collating paper timesheets, entering information in Excel and checking for accuracy manually wastes valuable administrative time.”

Mitch Rose, now-retired senior vice president of sales corporate segment at Billtrust, added that incorporating electronic methods that help automate the invoice-to-cash process can prove beneficial in the long run for both accounts receivable and accounts payable.

“Moving to digitization allows customers to pay whenever and wherever they are, which encourages faster payments and increases efficiency for your customers and your A/R team,” Rose told Business News Daily.

He added that digitizing payments and invoicing saves on costs. Moving these processes so they are online saves postage, paper and printing costs and time. [Related article: How to Choose the Right Accounting Software]

7. Stay organized

It’s important to find an accounting solution that gives you and your team the ability to stay organized and monitor all of your outstanding invoices. This could mean figuring out if you should use a cash basis or accrual basis for tracking invoices. 

“Without access to a centralized view of invoices and bills, companies lack the ability to quickly determine what average payment time is, how much money is outstanding, how many invoices and follow-ups have been sent, which companies are frequently delinquent and so on,” Narayanaswamy told Business News Daily.

8. Make sure you’re Payment Card Industry (PCI)-compliant

If you accept credit card payments from your clients, your payment processor must be compliant with PCI data security standards. These globally recognized standards were created to protect consumers’ data. Rose stated that compliance with PCI standards is mandatory for any company accepting credit card payments.

“Not only is PCI compliance crucial for legal reasons, but it also engenders trust with your customers,” he said. “Businesses that have been breached see a loss of customers, damaged reputations and drops in stock price ― not to mention the exorbitant costs to remedy the breach and then handle post-breach fraud claims and loss of revenue from customers.”

Rose added that compliance is more important as businesses use credit cards increasingly in B2B. Most companies use third parties that provide payment portals and processes that allow them to accept electronic payments and be PCI compliant. [Related article: Guide to Accounting Reports]

9. Communicate

Clear communication during each phase of a project keeps clients and businesses informed about payment expectations.

“Understanding the level of invoice detail a client needs from the beginning, creating proactive plans in case of scope creep and keeping clients updated each step of the way can save considerable time and effort during the actual invoicing process post-project completion,” Narayanaswamy said.

The best billing and invoicing software for B2B businesses

Billing is the cornerstone of B2B operations, so selecting the best accounting software is crucial for B2B companies to streamline their financial operations effectively. Here, we delve deeper into key tools used for billing and invoicing offered by leading software solutions. 

1. QuickBooks Online

QuickBooks Online offers comprehensive invoicing features with customizable templates, automated payment reminders and tools, such as recurring invoices and payment scheduling to streamline the billing process for businesses of all sizes. Read our QuickBooks accounting software review here.

2. FreshBooks

FreshBooks provides customizable invoice templates, multicurrency invoicing capabilities for global markets and automated payment reminders, simplifying invoices for businesses and ensuring timely payments from clients. Read our FreshBooks accounting software review here.

3. Xero

Xero offers seamless invoicing and payment tracking capabilities and integrates multiple payment gateways for secure online payments, allowing businesses to create and send invoices efficiently while monitoring payment statuses in real time. Read our Xero accounting software review here.

4. Zoho Books

Zoho Books offers extensive invoicing features including customizable invoice templates, invoice tracking, client portal functions for enhanced client communications and automated payment reminders, enabling businesses to streamline their billing processes and improve cash flow management. Read our Zoho Books accounting software review here.

5. Plooto

Plooto simplifies the billing and invoicing process with features like automated invoice creation, customizable invoice templates, payment approval workflows, recurring payments and real-time tracking to help businesses have accurate payments met. Read our Plooto accounting software review here.

Optimize your billing practices 

Implementing billing practices and utilizing robust billing and invoicing software is essential for the success of a B2B business. Electing the right billing and invoicing software tailored to your needs can also enhance accuracy. With these strategies and tools, B2B businesses can achieve smoother transactions, healthier cash flow and stronger client relationships.