You spend hours pulling information from different documents, crunching the numbers, and putting everything together. You finally have everything ready, and you present the document to the client. What do they do with your hard work? Do they sit down and read it immediately? Do they congratulate you on all your hard work? Do they whip out their checkbook on the spot?
No, they ignore it for several weeks. And in the meantime, your cashflow has taken a serious hit.
What document could possibly take this much time and cause so much hassle? Of course - it’s the invoice. As an architect, your invoices are based on time and costs, and they can be quite complex and involved. And clients are notorious for forgetting to pay them, for weeks … or even months.
Is this just the way it is in business, or is your invoicing system in need of an overhaul? Even a few small changes can make a positive impact on your cashflow. Here are five tips for improving invoicing at your architecture firm:
1. Take Advantage of Technology to Speed Up Payments
When I started interviewing architects for our website’s case studies section, it surprised me to learn just how many hours a practice typically spends on invoicing. Although, perhaps it shouldn’t have. My father is in the construction industry, and for years I’ve watched him spend his evenings crunching numbers on a calculator and spending hours creating detailed quotes and invoices. It wasn’t that he enjoyed all that work - he just didn’t realise there was a better way.
I helped him set up a cloud-based project management system so he could track time on site, record costs at the timber yard, and then use that information to create a detailed invoice in minutes. For weeks after he started invoicing online he kept going to his office in the evenings, then emerging with a big smile on his face when he realised he had no invoices left to send!
Is your invoicing process similar? Are you writing out invoices by hand, or using spreadsheets to create job details and then pulling that data together? How many hours do you spend calculating your invoices?
As an architect, you rely on the latest construction technology to make your vision come true. So you should also be looking to technology to solve your tricky business situations. Recently, Xero accounting did a survey of their customers and discovered that since moving to their online invoicing system, companies are getting paid faster (from an average of 48 days to an average of 33 days). Online project management and invoicing programs can speed up your invoicing by:
- Enabling you to create and send an invoice immediately. My dad sends the client an invoice before he’s even left the site.
- Pulling data from contacts, jobs, and staff to populate the invoice and calculate hours and totals within minutes.
- Storing all your data in one place, so you can easily pull up an invoice when you need it.
- Allowing you to run reports; you can quickly figure out who hasn’t paid, and chase up those invoices.
2. Don’t Get Fancy with the Design
Have you ever received an invoice that’s been handwritten by a contractor who appears to have learned penmanship from the scribes of ancient Egypt? What about an invoice that’s so design-centric the actual information is lost amidst a giant colourful splatter, or worse, requires you to have a degree in cryptography just to decipher it?
Save those sweeping curves and avant-garde details for your latest building project. Your invoice design should be clean, simple, and easy to read. If your client can’t figure out how much to pay you and how, then is it any wonder you can’t get a payment on time?
Keep the fonts large - at least 12pt - and readable. Don’t use script fonts for anything other than large headings. And avoid all caps - it’s harder on the eyes for long passages.
One tip is to keep important information away from the sides of the paper - in many companies, invoices are printed out and photocopied multiple times, and this often means information around the edges is left out.
3. Split Larger Jobs into Progress Payments
Progress payments are a joy for both client and architect. For the client, it means bills come in small, manageable chunks, and he can keep track of exactly what’s happening and what he’s paying for more accurately.
And for you, it means you have better control over cashflow. You’re not hanging out till the end of a large job to get an influx of cash, and you’re able to better manage costs associated with the job.
A comprehensive online project management or accounting software program will help you calculate and manage progress payments.
4. Include all the Information
It seems obvious, but you have no idea how often architects accidentally leave off important information from their invoices.
If you’re creating invoices manually, it can help to have a checklist of all the details you need to include, to make sure everything is there before you sent it off. This list would include:
- Accurate contact information for your company.
- Job and invoice numbers.
- The client’s name, company name and contact details.
- An itemised list of tasks performed and expenses. This helps the client understand what they’re paying for.
- A total amount due.
- Amount already paid and amount left to pay.
- Progress payment number, if this is a progress payment.
- Details of how to pay.
- Payment terms and conditions.
- A “Thank You for Your Business” note.
Of course, if you’re using project management or accounting software to send invoices, these details are automatically set in the template. Job details and descriptions of different tasks can be automatically added and then tweaked as required.
5. Make it Easy to Pay
The easier it is for your clients to pay your invoices, the higher the chance that they will pay promptly. So how do you make it easy for your clients to pay?
It starts with including accurate and easy-to-understand payment terms. Make sure bank account numbers and instructions are printed in an obvious place. Offer several different ways to pay, to cater for every type of client. Look over your payment terms and the methods you accept. Are they easy to follow? Do they encourage early payment?
Make sure any payment terms and conditions are written out in full and are easy to understand. Do you include a penalty fee for late payment? You might consider trialling this, as it can help give those late-payers a nudge.
Again, this is where online invoicing and project-management systems come into play. Your client is sitting at his desk when your email comes through - oh, it’s your invoice! No worries - he can click and check all the details are correct, then pay online via credit card or Paypal. Or, if he wants to pay with bank deposit, he can open a new tab in his browser and get that done immediately. Or, he can forward the email with your invoice on to the right department. Simple.
There’s no reason why your practice should be waiting months to receive payments, and why you should be spending hours chasing unpaid invoices. Even a few simple tweaks can make all the difference, and moving to a more streamlined, automated system through your project management software can be a revelation.
What are the biggest invoicing headaches at your architecture firm? How do you manage progress payments and highly customised invoices for your clients?
Learn how WorkflowMax can streamline your firm with custom quotes and invoices, seamless time tracking, powerful reporting and mobile access for on-site staff, or read how other architecture practices have benefitted from cloud-based project management.