When starting a real estate business, there are specific things that you need to prioritize over the others. Since you’ll be selling properties, the manpower you’re going to fill first needs to be top-caliber agents.
Thinking along that line, you’re also going to hire an administrative or accounting assistant later on once your business has picked up. But for the meantime, you’ll be left doing all of their tasks, one of which is invoicing.
Accounting for non-accountants is already possible with the help of some technology – at least at a certain point. But, to ensure better collection, you can employ some of the tips found in this article.
The Invoice and Its Uses
An invoice serves as documentation for a company’s sale of goods or services. In most cases, it also acts as a billing statement in order for you to present your intention to collect the amount stated therein at a particular date.
Besides that, an invoice can also be used for tax purposes as a basis of sales and value-added taxes, as legal protection (both the seller and buyer) against fraudulent acts, and as a means of determining sales trends to be used in marketing and financial planning.
Use Automated Invoicing
Startup businesses, especially if you’re into real estate, tend to be short on personnel just yet. It’s quite understandable for the back office tasks to take the least priority while you try to market your inventory of properties.
With the use of an automated invoicing process, you don’t have to sacrifice this essential part of your business process. It’s critical to ensure that invoices get to the customers on time, and this is where automation can help – by cutting down the processing time in half or even more.
Luckily, there are free real estate invoice templates that are suitable for new businesses that just want to dip their toes in the water. Thus, you don’t have to spend a dime, and you can divert the supposed cost to something more pressing at the moment.
Prepare and Send Invoice ASAP
The best way to ensure you’ll get paid early is to prepare and submit the invoice as soon as the
transaction is done. This is particularly beneficial if the client has the tendency to prioritize the bills at hand.
This is also favorable to your business as preparing the invoice soon enough will make tracking the aging of your receivables easier and accurate. In practice, the due date is based on the receipt of the invoice, not the date the products or services were received.
Entice Early Payment Through Discounts
The common practice in business is to penalize the customers for paying beyond the due date. While this is acceptable, as this is typically based on agreement, this can result in customers being dissatisfied and might find better deals with other companies.
By offering discounts for prompt payments, clients might take that opportunity to clean up their payables list while saving a small fee in the process. However, this might not be so attractive to clients who may be short on cash for operations.
In such a case, they might feel that waiting for the due date to release funds might seem a more viable option. However, while providing discounts are not that prevalent, it never hurts to try.
Maintain an Invoice Series
Having a number sequence on your invoices makes it easier to track them in your accounting system. It’s also easier to track when an invoice is missing or hasn’t been sent or billed.
This will also be good in terms of referencing. Instead of having to describe the transaction, the date, the amount, or any pertinent information, you just need to identify the reference number.
Don’t Limit the Payment Options
Make sure that the different modes of payments you accept are indicated in the invoice. This increases your chance of getting paid on time, as the clients will have many options to settle their obligations to you.
If they don’t have enough cash on hand or in the bank at the moment, it can be reassuring for them to know that you can accept credit card payments, mobile payments, or even Bitcoins so they can avoid their debt being overdue.
Make a Followup
An essential part of the process of extending credits to clients is making a followup of their payments in case they missed the due date. Anything can happen on the customers’ end – forgetting to pay, misplacing their invoice, or worse, some just don’t voluntarily pay unless you keep bugging them, hoping you would forget about it.
As clients have different traits and paying capacities, it’s your responsibility to call and remind them that they have to pay on a specific date or ASAP in case their bill is overdue. This way, they can’t pass the blame on you in case they use the ‘forgetfulness’ or the ‘misplacement’ card.
By employing simple reinforcements to your invoicing process, you can improve your collection rate by a significant margin. This will not only ensure smooth operation by maintaining liquidity, but you’ll also be able to focus on expanding your business through extensive marketing.
While sales and marketing are your bread and butter, it’s the billing and collection that actually brings money to the table.