Automate the Billing Process

Billing is one of the worst looked after internal areas for professional businesses. Through neglection, most cash flow systems are designed for the benefit of the client, not for the benefit of the business.

Furthermore, billing practices are left to technical employees who only want to perform technical work and not administrative work, further delaying the billing process.

You set the rules of engagement, so why not design them around reducing the time between engagement and time to collect cash for work performed?

Most Billing Processes

Your billing cycle will, more or less, follow the process below:

  • Client work come in;
  • Client engagement letter (hopefully) sent;
  • Work started;
  • Interim fees end of first month;
  • Client queries sent out;
  • Waiting, waiting, waiting;
  • Client queries returned;
  • More client work;
  • More client queries;
  • Waiting, waiting, waiting;
  • Work finished, reviewed and sent to client (or maybe a client meeting to deliver);
  • Bill completed at the end of the month;
  • Waiting, waiting, waiting;
  • Cash arrives

For those businesses who provide transactional types of work, the two monthly turnaround time can be reduced to one month. Even in this scenario, the date from commencing the work to collecting payment can be over 100 days. Below is a simple example explain this.

Automate the Billing Process img

Benefits of Automation

There are many benefits from automating the billing process. The first benefit is an immediate cost savings in both time and resources spent. This leads into a simplified collection process, with invoices raised in a timely manner from monies in trust or via direct debit arrangements. Below is the same 100-day example with automation.

Automate the Billing Process

Indirectly, you will form better customer relationships for being upfront about the process and expectations. Automation can also be developed out of your core business technologies providing better information on your customers.

Where to Start?

If you want to get a different cash result, you need to change the way you engage clients. Therefore, start by reviewing your engagements and cost agreements.

Fix your current agreements and engage clients around making billing an automatic admin function of the business in these engagements i.e. Initial fee billed when cost agreement is signed.

Implement reviews. These should be weekly and focusing on WIP that can be withdrawn or billed. Reviews don’t stop with billables, follow up debtors weekly instead of monthly

Remember to only focus on what you can control: the terms of doing business around billing and collections.

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