7 min read
To improve your business's billing process, you must embrace digital transformation by integrating reliable payment methods and automated invoicing. Start by incorporating UK bank payment solutions like Direct Debit for seamless transactions, automated billing and collection to reduce errors and offer various payment options and flexible payment terms to enhance customer experience and improve cash flow.
For small businesses, the billing and collection process is often a nightmare of titanic proportions. Late payments are rife, meaning your team must spend even more time on bill processing. Plus, it’s easy to underestimate the importance of the customer billing process. To ensure that sales and finance work harmoniously, you must maximise efficiency within your company’s bill payment process flow. But that’s easier said than done. Learn how to improve the billing process with our simple guide.
1. Automate your invoicing process
Automation is another factor that can drastically affect your billing and collection process. Your company can use automation tools to speed up invoicing. From creating invoices automatically to sending automatic overdue payment reminders, automated invoicing systems can help to cut down on the admin related to the customer billing process, thereby maximising efficiency.
Further, you can automate payment recoveries – i.e., dunning – to ensure you don’t waste too much time on payment retry attempts. Research has shown that processing an individual invoice in the UK can cost between £4 and £25, with more complex invoicing costing up to £50. Automated solutions significantly reduce costs and time spent on manual admin by making the process more efficient.
2. Consider Direct Debit
As we mentioned earlier, your customers may be expecting to be offered a broad range of payment methods. Why not consider Direct Debit? Because it’s a “pull” payment, your clients won’t have to take any action – the payment will automatically be taken from their account. The “pull” nature of Direct Debit guarantees a high payment success rate - GoCardless collects 97.3% of payments on the first attempt.
For anyone wanting to learn how to improve the billing process, switching to a Direct Debit payment solution like GoCardless should be on the agenda.
How to collect Direct Debit payments with GoCardless
Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).
Easily set up & schedule Direct Debit payments via payment pages on your website checkout or secure payment links.
From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.
3. Agree on terms with the client
First off, it always helps to agree with the client before you start delivering work. These terms should clarify several areas associated with the bill payment process, including:
the types of payment that you accept, the timeframe within which the client is expected to pay the invoice,
the late payment penalties that may be charged if they don’t pay on time,
whether you bill by the project or on an hourly basis.
Setting terms early in the relationship can help ensure everyone’s on the same page so that there aren’t any surprises when sending over your first invoice.
4. Offer a range of payment methods
From credit cards to cheques to bank payments to digital wallets, your clients may wish to use an extensive range of payment methods. Rather than a rigid bill processing system that only allows a few forms of payment, you should strive to offer as many payment options as possible. This can help you onboard more international customers – who may have different payment preferences to UK clients – and scale globally.
You may also wish to consider alternative payment methods, such as cryptocurrency, to maximise the scope of your company’s accepted payment methods.
Additionally, you should remember that some payment methods are more prone to failure than others. Card payments, for example, are commonly associated with failed payments. The reasons are simple: cards can get lost or stolen, and every 2 to 3 years, you will likely get a new one with brand new details – resulting in failure rates between 10% - 15%. With GoCardless, 97.3% of payments are successfully collected on the first try, with clear benefits in cash flow and reduced manual admin.
A report by GoCardless shows that 54% of business payers and 25% of consumers prefer bank payments to pay for invoices, clearly showing a growing demand for more convenient and efficient payment methods.
5. Send reminders
Sending reminders is crucial to benefit from a streamlined and efficient billing process. Reminders are a proactive communication tool that considerably impacts cash flow by reducing the probability of missed deadlines and ensuring timely payments. Well-executed reminder systems help foster positive relationships, opening lines of communication and addressing potential issues before they become bigger problems – supporting the overall financial health of your business.
6. Minimise errors
Throughout your bill payment process, it’s vital to reduce errors as much as possible. Mistakes – for example, an incorrect address or a missing PO – can lead to confusion and mistrust while considerably slowing down the billing and collection process. For example, errors on household bills cost the average consumer in the UK up to £400 a year – with 70% of consumers being overcharged, a third more than once. The same report states that the customers and not the companies detected 95% of mistakes.
Efficient accounting software will minimise invoice errors, but it’s also important to supervise this process and ensure that a member of your accounting team checks every invoice before it gets sent to a client. If that’s not possible, spot checks can help you maintain your invoices' accuracy and identify potential errors.
7. Consider the impact of a bad billing process on your customers
A non-optimised billing process can have a significant impact on customers and businesses. From a business perspective, inefficient billing can lead to financial losses and increased admin costs. Late payments negatively affect cash flow, and dealing with them diverts resources from other core business activities.
For customers, it can lead to a lot of frustration. Inaccurate or unclear invoices, unexpected charges, or inconsistent billing practices can deteriorate trust and create unwanted friction. No customer wants to deal with billing errors, spend time resolving disputes or have their services interrupted due to payment issues. But maybe, more importantly, a bad billing process can smear a business’s reputation – resulting in customer churn and overall negative feedback.
If you follow the tips that were suggested in this article, you will create a smooth and transparent billing process, leading to more revenue, sustainable business success and increased customer satisfaction.
Automation is key: from instant invoice generation to automatic payment failure notifications – not forgetting seamless payment retries – automation saves you time on manual admin and makes sure you get paid on time.
Direct Debit can help: Direct Debit is an automated payment method that benefits both businesses and consumers. For consumers, the Direct Debit Guarantee protects them from errors and fraudulent activities. For businesses, GoCardless Direct Debit puts you in control, so you decide when to get paid, not your customer.
Local bank payment methods: 76% of international consumers prefer being able to pay in their local currency. GoCardless offers cross-border, direct account-to-account bank payment options in over 30 countries with low transaction fees – a golden opportunity to boost your international sales.
Payment failure: with failure rates between 10-15%, card payments can lose you customers and impact your cash flow. With bank payments, you can stop chasing payments and spend less time on manual admin.
Case Study: RAM Tracking
RAM Tracking, a global provider of vehicle tracking and fleet management services, turned to GoCardless to streamline its payment processes and build a scalable payment solution. This has notably improved their efficiency and customer experience.
Integrating GoCardless with their existing payment stack helped RAM Tracking automate the entire billing process, from setting up direct bank payments and invoicing to collection and reconciliation. This has significantly reduced manual labour, accelerated reporting, and streamlined end-of-month procedures.
Lorraine Longbottom, RAM Tracking’s Transitional Finance Manager, noted,
In the UK, 98% of RAM Tracking's customers pay via GoCardless, which facilitates immediate processing of due invoices. The automation facilitated by GoCardless has also been beneficial when incorporating acquired businesses into their system, eliminating the need for additional administration.
RAM Tracking also utilises GoCardless's Success+ functionality, which uses payment intelligence to retry payments on an optimal day for each customer automatically. This has enhanced the RAM Tracking team's efficiency and allowed more time for customer query resolution.
We can help
GoCardless helps you automate your billing process, cutting down on the amount of manual admin your team needs to deal with when chasing invoices.
GoCardless makes it quick and easy to get started, and with no contracts or long-term commitment required, there’s no risk. You can set up instant, one-off, or recurring payments in the merchant dashboard in just a few clicks, and GoCardless automatically creates and sends all the necessary forms, doing all the heavy lifting for you. You can also connect to GoCardless via over 350 partner apps, such as Xero and Quickbooks.
How can invoicing process be improved?
Improving your invoicing process starts with automating key aspects of the process, notably bill creation and delivery. Utilise top-tier invoicing software that can create, send, and track invoices efficiently, which reduces manual errors and speeds up the billing cycle. Incorporate real-time analytics to track invoice status and resolve issues faster. Embrace a variety of UK-based payment solutions such as Direct Debit for recurring payments and card transactions for versatility, enhancing the customer's ease of payment. Also, ensure your invoices are clear, detailed, and accurate to minimise disputes, include terms of payment, and offer multiple payment options to cater to customer preferences. By integrating these elements into your invoicing process, you'll not only increase operational efficiency but also improve customer satisfaction and your business cash flow.
How do you ensure billing accuracy?
Billing accuracy is paramount in maintaining trust with your customers and fostering a healthy cash flow for your business. Implementing a robust automated invoicing software is the first step towards ensuring this. The software should be able to handle complex calculations, apply appropriate tax rates, include any discounts, and accurately record products or services rendered. In addition, setting up a double-check or approval process, especially for high-value invoices, can mitigate the risk of human error. Remember to regularly update customer information and payment details to reflect the current status, thereby preventing inaccuracies arising from outdated data. Finally, a comprehensive audit of your billing process on a regular basis can further ensure accuracy by identifying any recurrent errors or inconsistencies for rectification.
What are the challenges in billing?
Billing presents several challenges, including maintaining accuracy, ensuring timeliness, managing customer disputes, and complying with changing regulatory standards. One of the foremost challenges is error management. Inaccuracies can occur in bill calculation, customer details, or service/product descriptions, leading to mistrust and potential loss of customers. Timeliness is another critical aspect, as late or misplaced bills can disrupt cash flow and cause customer dissatisfaction. Moreover, dealing with customer disputes over bills can be time-consuming and may strain customer relations. Compliance with regulatory standards, particularly in cross-border transactions, can also be complex, requiring constant updates to the billing process. Furthermore, security and data protection are increasingly important given the shift to online billing, with breaches potentially causing significant harm to both customers and the business's reputation. Finally, adapting to changing customer preferences, such as the shift towards digital payments, can pose an ongoing challenge for businesses.