Simple Ways To Optimize Your Billing Process

Atradius, a prominent financial institution operating in the insurance sector, estimates that 39% of all invoices in the USA are paid late, and that the companies are asked for an extension in the deadline for the invoice payments 52% percent of the time. Invoices area crucial aspect of business operations, and getting late payments for the services rendered or the products you sold canfrustrate you greatly.

For a small business, the billing process can be quite complicated and time-consuming. Despite the emergence of automated software that is constantly figuring out how to reduce delays and errors in the billing procedure, occasionally an issue may crop up, causing trust issues between the business owner and their client.

The process of improving the billing process flow is never-ending, but it can yield results that can enhance the output you get from your billing software. Here are a few suggestions youcan follow to optimize your billing process.

  • Automate your billing process
    Automating your billing processes can go a long way in ensuring the smooth operation of your business. Make sure you get the billing software for business that can help you create custom recurring invoices, track their status, keepsensitive client data securely, and schedule and send reminders for payment as well. This will not just save you a lot of time, money, and effort, but also reduce your stress levels.
  • Provide complete information
    Providing relevant and complete information to your customers is key for your process for billing to go smoothly. Many business owners tend to make the mistake of focusing too much on their invoice designs rather than ensuring that it has crucial information, such as a description of the product/ service, the order and invoice number, total amount, the last date for payment, acceptable modes of payment, the terms of payment, and contact details as well. A thankyou note to the customers, which shows you care, can also be a welcome addition to the invoice.
  • Establish terms
    To increase your chances of getting paid on time, make sure you establish the payment terms and policies with the client beforehand. Tell the customer what you expect, ensure that they are comfortable with it, and also let them know what the penalties are for violating the terms.Theywill appreciate the effort and thought that has gone into the process. Establishing these ground rules will foster an atmosphere of trust between the stakeholders.
  • Make your invoice impressive
    Sending out an easy-on-the-eye invoice is important as the client can gauge your level of commitment just by looking at the invoice. Always ensure to personalize the invoice as the customers feel special when you do that. Whileyou need to ensure that the invoice is well-designed and attractive, it should not take precedence over simplicity.
  • Monitor the payments
    It is quite prudent to keep track of what stage of the billing process you are at. Monitoring the payments is crucial as it allows you to ensure that the invoices are error-free and reaching on time while also providing you with constant feedback on the billing software you use.
  • Get on the cloud
    This will allow you the flexibility and accessibility that is necessary for today’s competitive business environment. Cloud-based systems not only speed up the process and eliminate irrelevant data from your system, but it will also allow you the luxury of monitoring the data from wherever you want.

Closing thoughts
Success in business often boils down to how smooth the operations are, and getting your invoicing right is a key part of that process. It doesn’t have to be a painful and confusing journey as long as you have the right tools – clear payment policy and an automated billing system – that keeps your billing process running like clockwork.

Know how Past Due Invoices can help Tackle Late Payments

SMBs bear the brunt of late payments, which hit hard on the underpinning functionalities and success of organizations.

As facts are best told in numbers, here is a survey conducted by Marketvoice on every aspect of invoices for small businesses. The results of this survey are based on data collected from over 80,000 invoices issued to different companies in nearly 90 countries.

The key facts derived from this data are:

  • 62% of invoices are paid late
  • 1/3rd of the invoices are paid more than two weeks late

Find below an image that shows the amount of delayed payments made to companies from different sectors.

late payment days


Is there a way to tackle this challenge effectively?

Though different types of invoices exist, the past due invoice helps initiate the process of getting the past due amount from customers.

Let us understand past due invoices.

What Is a Past Due Invoice?

A past due invoice is an important part of small business invoicing. It is an official document reflecting the billing statement that refers to the amount that has not been paid within its due date. Typically, SMBs implement a structured process of sending invoices for services to their clients. They usually have online invoice software in place that sends invoices with details of the payments.

If the due date lapses, the invoicing tool automatically triggers a past due invoice with details about the overdue payment and any penalties for the time lapse.

When Is a Past Due Invoice Needed?

Usually, in SMBs, projects are finalized, developed, and delivered in advance. They are either paid for in installments with the ongoing work or after completion. Clients begin using the product, experience its advantages and clear payments from the profit they obtain. This is not due to the lack of trust in the service/product provider, but because clients are not always equipped with heavy funds.

In this scenario, service providers seek the help of online invoicing software that maintains accounts of payments received and those that are due. If a client fails to pay up and the time period provided lapses, the invoice software immediately sends out a past due invoice as an alert.

Who Past Due Invoice Can Help?


Though freelancing has its own benefits, freelancers frequently experience the pain of not being paid on time. They can use the past due invoice to inform their clients that they have a payment due.

A past due invoice helps freelancers convey to their clients that they need to arrange funds for overdue payment. This invoice may also include extra charges for late payment, if applicable.


In a retail set up, managing inventory is one of the most challenging tasks. A retailer ideally places an order for the products from the wholesale provider and begins to distribute them. A partial payment is made for the products received.

In this case, the wholesale provider may find that payments are pending and the due dates have lapsed. He may send out past due invoices to inform the retailer about the past due amount.

Purpose of a Past Due Invoice and Its Role in Collecting Payments

Past due invoices also help in collection of due payments in a streamlined manner. This procedure includes the following steps:

Reconfiguration of Payment Terms

A service provider may advice the client about making full or partial payments within a given time. He may also reduce the time provided for the payment or charge a penalty for the late payment.

Checking for Errors

An error-free invoice may help speed-up invoice approvals, facilitating faster payments. This may involve a third-party to proofread invoices and check for errors.

Review of Credit

This includes reviewing the financial position of the customer if a medium-to-large credit request has been made. This review shall include an examination of the client’s financial statements and credit reports.

What Information Needs to Be Present on a Past Due Invoice Template?

  • Invoice number
  • Invoice date with payment due date
  • Customer/service provider name and contact information
  • Detailed split-up of services rendered, including dates, descriptions, man-hours involved, manpower invested and applicable charges
  • The subtotal and total of the amount to be paid
  • Specific payment methods accepted
  • Terms and conditions for early or late payments, if applicable

What to Expect after Sending a Past Due Invoice?

Past due invoices harm the credit of any particular individual/company. Service providers may reduce the credit limit or even stop accepting project proposals.

Long-standing past due invoices are eventually directed to collection agencies. This may result in a permanent discredit on that particular company, leading to other service providers limiting their business association.

A service provider may alert the customer and request a payment multiple times after sending a past due invoice. If the customer fails to revert, such invoices are directed to collection agencies.

These are the steps undertaken after issuing the invoice:

1. Sending a Dunning Letter

This is a low-key reminder message that conveys the amount due, invoice number, and invoice date.

2. Reminding over Call

If a dunning letter does not receive a response, a personal phone call is facilitated to know the status of the payment.

3. Escalating

If the service provider is not able to speak to the concerned person over call and doubts the intention of the customer, the provider may escalate to the accounts or senior management.

4. Setting up a Payment Schedule

If the customer is in a financial crisis, the service provider may help by breaking down the payment into installments and scheduling it. However, this is backed by a personal guarantee for the payment from the customer’s side.

5. Taking Legal Action

If these attempts fail to obtain the payment from the customer, an attorney letter may be hired to issue further warnings.

6. Filing an Involuntary Bankruptcy Petition and Suing the Customer

If the service provider finds that the customer has not cleared payment dues for other companies as well, he along with these companies may together file a bankruptcy case and initiate legal procedures accordingly.

It should be noted that the first few points are modest efforts to get payments from the customer while attempting to pursue a cordial business relationship. The remaining aspects focus on simply getting the due payments based on the virulence of the situation and may result in the discontinuation of the business association.


Past due invoices play a pivotal role in the payment cycle. They help service providers remind their customers about pending payments and that they need to arrange funds within a stipulated time to avoid functional hiccups.

The incorporation of effective online invoicing software can ease payments collection by triggering past due invoices, when required. Have you implemented one to manage your payments? Do share your experiences with us in the comments section below!

Know How Pro Forma Invoices Can Help Decode Challenging Sales Cycles

Striking the productive balance between multiple facets of a business is no easy feat. The realization of delayed and unpaid invoices makes it furthermore demanding.

Fundbox surveyed a few SMBs to understand the impact of unpaid invoices and found that across the United States, on-time payments can help SMBs hire an additional workforce of 2.1 million employees.

Is there a strategy to effectually facilitate timely payments in SMBs?

A sales cycle initiated with a pro forma invoice can help streamline payment procedures. Check out the details right away.

Understanding Pro Forma Invoice

What Is a Pro Forma Invoice?

A pro forma invoice is a binding agreement sent to customers before or along with the project delivered. This invoice includes specifications like the number of project modules to be worked on, technical specifications, manpower involved, and billing hours. Though it contains a precise sales price including taxes and miscellaneous fees, this value is subject to changes.

Amongst the different types of invoices, the pro forma invoice is primarily utilized to provide a good faith estimate and save the customer from unpleasant surprises regarding the amount charged.

These invoices for small businesses help curb bottlenecks in their internal sales approval process. It also helps streamline sales procedures by eliminating chances of additional back-and-forth after the confirmation of a sales deal. Pro forma invoice ensures that the parties involved have agreed upon all conditions, before proceeding with the final deal.

When Is the Pro Forma Invoice Needed?

A pro forma invoice is used in the early stages of a project cycle when a service/product has been finalized and the payment is due.

  • A pro forma invoice in small business invoicing is needed as:
  • A proactive negotiating tool between the service provider and the customer.
  • A voluntary document to facilitate the smooth functioning of sales procedures.
  • A blueprint of the entire project cycle with key information to be used in the final invoice.

SMBs have begun to implement invoicing tools to facilitate faster payment cycles. Such tools do not limit to billing invoices, but also accommodate pro forma invoices to kick-start the sales cycle.

How Is Pro Forma Invoice Incorporated?

Pro Forma Statements for Business Mergers and Alliances

Undertaking a merger is based on the assurance of the parties involved. Pro forma documents help nurture, reinforce this assurance with appropriate declarations, and have the parties identify key considerations that may impact business processes.

Pro Forma for Start-Ups

A proposed start-up company may look towards potential investors for funding. A pro forma document, in this case, will assure that the start-up will be profitable and financially stable. This statement highlights the primary strengths of the proposed company, thereby acting as motivation to rely upon and invest.

Pro Forma Statements for Budgeting and Planning

A pro forma statement will include the required budget and timing about the company’s future cash requirements. It will include approximate estimates as placeholders that can be developed later. It helps companies to be financially equipped to prevent unprecedented delays and overdue payments.

Pro Forma for Retail Stores

When a customer approaches a retail store for a purchase, the order is placed and the product delivered. A pro forma invoice mentions the details of the purchase with an estimated charge. The final invoice is generated after product delivery. The final invoice is close to the estimate in the pro forma invoice. The buyer is free to make modifications and negotiate before the final invoice is sent.

What Is the Purpose of a Pro Forma Invoice?

The purpose of a pro forma invoice is to:

  • Provide an overview of the charges involved in the project cycle including project requirement, modules to be worked on, and billing hours involved.
  • Facilitate faster payment cycles by providing an estimated sales price, thus preparing the client to arrange necessary funds, resulting in prompt payments.
  • Declare value of the project with technical specifications, planned man-hours, and billing charges for legal clearance, if applicable.
  • Allow modifications in sales specifications before finalizing the delivery of products/services.

What Information Should a Pro Forma Invoice Contain?

A pro forma invoice should specify details of:

  • Invoice number
  • Name and address of service provider/customer
  • Name and address of service provider/ customer
  • Description of the products/services involved.
  • Detailed information about subtotals involving tax and deductions.
  • Details about additional charges, if any.
  • The validity of the invoice.
  • Proposed terms of sale.
  • Proposed terms of payment.
  • Certifications required by regulatory bodies.
  • A signature, stamp, and seal of the service provider.

What to Expect after Sending a ProForma Invoice?

After the proforma invoice is sent, the customer may proceed with the project, conduct negotiations or drop the sales deal. If the customer decides to continue with the project, he will begin the process of payment based on the terms mentioned in the pro forma invoice.

A few other aspects of proforma invoices are:

  • They are not finalized invoices and are open for modifications.
  • They cannot be used as a legal invoice for services as they do not have a unique invoice number.
  • This invoice format is not predefined and varies based on requirements.
  • They do not have a fiscal value and cannot be included in accounting records.


Incorporating proforma invoices into the sales cycle can be beneficial for both, the service provider and customer. As a part of the billing software for small businesses, these invoices provide a sneak peek into the sales cycle helping the service owner and customer to be well- equipped financially and strategically.

If you are a business owner facing similar challenges, initiate your next sales pitch with a proforma invoice generated by simple invoice software.

A good online invoicing software can help SMBs sending out effective proforma invoices to clients for speedy transactions. Have you started using one for your small business? Do let us know your thoughts.