If you run a business then an understanding of the billing process is at the very heart of ensuring you receive payments and keep the business growing and succeeding. It involves the creation of an invoice that covers the details of the product, the price being charged, the payment terms and contact information for the buyer and seller.
Why billing is important
On a very basic level billing is important because it ensures your cash flow is maintained and the goods or services you provide are paid for. The other functions of a comprehensive billing process include:
Billing helps any business that sells goods to keep track of how much inventory they have available for sale and if each individual order has been fulfilled or not. Once it’s been gathered, this information can also be used for future planning, as it reveals sales patterns and the popularity of specific items.
The records created through the billing process include details of when goods or services have been sold, who they were sold to and how much for. Such details enable both buyer and seller to track payments and ensure that outstanding invoices don’t fall overdue.
Collecting accurate data plays a huge role in businesses of every type. The billing process simplifies the process of data collection by creating an automatic record of all bills and invoices. By analysing this data a business can tap into information such as peak buying times, the popularity of individual products and longer-term buying patterns. This data also plays a part in stock control, long-term planning and marketing strategy.
The invoice issued as part of the billing process is legal proof of the sale having taken place. If an invoice isn’t issued problems can arise when collecting the payments your business is owed.
The steps involved in the billing process
1. Review the billing information
The first step of any billing process involves collecting and analysing the data needed to create an accurate invoice. This data will include a product code if relevant, the price that corresponds with that product code or was quoted, shipping charges, taxes such as VAT and any payment terms already agreed with the customer. The precise detail of the billing information needed will vary depending upon whether your business provides goods or services.
2. Generate an invoice
Once the above data has been collected, reviewed and confirmed, it's used to create an invoice. Many businesses use a bespoke invoice template, with their logo and brand colours. Downloading a free invoice template may seem the cheapest option, but these can often prove difficult to modify and thus look less professional in appearance than your customers might expect. Many businesses now opt to work with software that automates the process of gathering the required data and generating an invoice.
3. Sending the invoice
Once it’s been created, the invoice can be delivered – usually by mail or as an email attachment. As with the creation of invoices, many businesses now opt to rely on automated software that sends out invoices automatically once they have been created.
We can help
An efficient billing process is part and parcel of almost every successful business, as long as you’re able to process the payments for those bills. Partnering with a payment platform like GoCardless makes it simple to ensure that cash keeps flowing into your business, and this includes the more complex aspects such as dealing with ad hoc payments or recurring payments.