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In these tough economic times, anything you can do to speed up the receipt of payment can help you tremendously. The delay between completing a flooring job, billing and eventually receiving payment impedes your cash flow. Electronic billing, also called electronic bill presentation and payment (EBPP), is one strategy to get cash in your pocket quicker. It will:
1) Cut the time between asking for payment and receiving it. It is estimated that the average invoice-to-payment cycle runs 41 days. Sending invoices electronically can cut this by 15 percent to 80 percent (depending on whom you ask), or about 6 to 30 days.
2) Reduce costs. Save on paper, stamps, labor and trips to the post office. Your savings may be as great as 60 percent to 90 percent, depending on your billing volume.
3) Improve your business image. You'll be seen as tech-savvy, and you'll portray your company as environmentally sensitive by eliminating paper from your billing process.
Here are a few methods any hardwood flooring contractor can employ in his business to speed payments.
In-House E-Billing
You do not need sophisticated software or IT staff to convert from paper to e-mail invoicing. Your current accounting software can serve as your e-mail platform—just attach your bill (created using your existing accounting software) to a customer's e-mail, rather than printing it out and mailing it. This is a free solution for online billing.
But this way of sending bills electronically isn't the most efficient. To automate your accounts receivable system, including e-mail tracking and billing reminders, you can use additional software or outsource your invoicing. One example is QuickBooks Billing Solutions (www.quickbooksmerchantservice.com), which provides an automated way to send invoices, statements and estimates, track customer responses, and follow up with reminders. With this service, you can set up pages that allow customers to view their billing history and make online payments. It also allows you to accept credit card payments online. The cost is $14.95 per month, plus 79 cents per invoice.
The cost of the service will probably be quickly recouped by saving what would have been spent on these various accounts receivable functions.
Outsourcing E-Billing
You don't have to handle the work yourself. If your time or staff is limited, consider using an outside vendor to do your e-invoicing for you. This can save you between 25 percent and 35 percent of the expense of doing your own billing. One such company is Billing Pros (www.billingpros.com). It's completely free and there's no limit on the number of bills you can send via e-mail each month. As advertised, all you do is point and click, and your billing statements are immediately e-mailed.
Payment Options
To speed your receipt of payment, give customers the option to pay online rather than mailing a check. You can offer these alternative billing options:
- Credit cards
- Electronic fund transfers
- PayPal or similar e-payment systems.
Giving customers the option to use these payment methods may enable those in troubled financial circumstances to pay you more promptly. These customers can manage their own credit card balances while immediately satisfying their obligations to you.
Paying Your Bills Online
Whether you receive your company's bills electronically or through the mail, you can reduce costs by paying your bills online. One method is your bank's online bill-paying option; check with your bank to learn about cost and other particulars. As with online billing, using online payment options saves you payment costs and reduces accounts payable time by hours each month.
MyCheckFree (www.mycheckfree.com) is a free bill-payment service that lets you pay specific vendors online by authorizing transfers from your bank account. Vendors participating in this program include most phone companies (e.g., T-Mobile, Verizon, etc.), many newspapers, and various utility companies.
Visa Business (http://usa.visa.com/business) also provides an e-payment system. There is an extensive directory of vendors accepting payment through this system, including insurance companies, phone and wireless companies, security, and mailing and postage businesses. Visa does not charge a fee for this service.
Pay your federal taxes online using the Electronic Federal Tax Payment System (EFTPS) at www.eftps.gov. While large companies (those with annual tax payments exceeding $200,000) must use EFTPS, many small businesses have chosen to do so because of the convenience and savings involved. EFTPS lets you transfer funds to the U.S. Treasury to pay income taxes (including estimated taxes) and employment taxes. The federal government does not charge any fee to use the service, but your bank might. With EFTPS, businesses can schedule payments up to 120 days in advance (individuals can schedule payments up to 365 days in advance). Using EFTPS does not give the government access to money in your account; only you can authorize payment.
To learn more, visit eBilling.org (www.ebilling.org), an educational resource sponsored by the Council for Electronic Billing and Payment (CEBP). It's pretty obvious that liquidity is drying up out there, and taking some of these steps will only serve to fight this tide. Not only can you save money, but you'll increase access to your money. Plus, your company will appear in-touch with technology, and it's green, too.