Wed, 5 August 2015
Podcast Short, Take 432
You wouldn't believe how many times we recorded and re-recorded this episode. From changing topics to forgetting to turn on the recorder to somehow being unable to get the intro out in a full sentence. But we made it! And today we're talking about billing.
A Story We Forgot To Tell About Great Customer Experience
On our last episode we talked about what does (and doesn't) make for good customer experience. And we meant to tell this story but forgot, so here it is…
Carol Lynn's mom was looking for a special type of pizza flour and she called a pizzeria that uses this type of flour to ask if they would sell her a bag.
They said no, she hung up and moved on.
But a few hours later that pizzeria called her back because they had saved her phone number from the caller ID and told her where she could buy the flour.
Carol Lynn's mom was so impressed by how they had gone above and beyond that she went 40 minutes out of her way just to visit and eat at this pizzeria.
And that is an example of fantastic marketing that can't be faked or even planned for.
Billing Gone Awry
I work with a non profit organization and we hired a vendor to perform a service. The vendor completed the service but never sent a bill.
Weeks went by.
At long last, we received the invoice. But the non profit has a certain process for handling invoices that takes approvals and multiple signings so it takes a few weeks for invoices to be paid.
When the check was ready, I dropped it off at the vendor's location and they ended up losing the check.
The worst part is that they didn't tell us they lost the check until weeks later.
So they had to reissue the invoice and it had to go through the whole process again.
It took the vendor nearly four months to get paid for that service.
In the meantime, his cash flow suffered and he was forced to pay out of pocket for the contractors he'd hired.
We Confess To Being Just As Guilty
We're often so busy working for our clients that we forget to bill our clients.
Recently we noticed a job we had forgotten to bill… from fourteen months ago. And we know we're not alone. Plenty of small business owners we know have cash flow problems, not because they don't have enough customers and not because they don't charge enough but because the just don't bill people properly.
The Many Ways Billing Can Go Wrong
If you don't invoice immediately, people may move on and forget. If they're not long term, loyal customers they may conveniently forget forever, even if you finally send them an invoice.
We once delayed in our invoicing and before we got to send the bill, the company went out of business.
Sometimes you give away hours worth of time because you're simply not paying attention.
Sometimes you get into "it only took me five minutes" mentality and you don't bother billing for that because it seems so small. But you might be surprised by how five minutes on top of five minutes can add up to many, many unbilled – and unprofitable – hours.
Give Away Your Time – On Purpose
Sometimes we do things for clients and don't bill them because we choose not to. If it's something small we'll "throw it in." The problem is that when you set that precedent, people come to expect you to do things for free.
The first time you send a bill after you've been doing things "to be nice" you should fully expect an argument. And in your mind you're thinking, "But I did all that other stuff free! Why are you arguing with me now?" And in your client's mind they're thinking, "But you did all that other stuff free! Why are you billing me now?"
If you are going to do something for free, do it on purpose and make sure your customers know you're doing it for free. Set the expectation that it's a billable activity and they should not expect to get it free every time.
Your Marketing Action Item
From Ralph: Make the line between performing a service and getting paid as short and straight as possible. Start by choosing a billing and invoicing software. Throwing an invoice into a Word document doesn't cut it. You need to be able to report on what money is owed to you and by whom. Then have a process and plan for how you handle invoicing and billing from completing your service through putting the check in the bank. If you don't get paid in two weeks, send a reminder. Still waiting four weeks later? Send another reminder. Six weeks? Better call. When you get that check, have a process for how it gets to the bank. Don't leave your cash flow to chance.
From Carol Lynn: Have a policy for how much pro bono work you're going to do. Set a limit on how many projects or how much time or how much value you're going to give in a year. Then when your friends or family or a non profit or that really nice guy with a sob story asks you to help them out, you can fall back on your policy. Tell them you can't take on their project because you've already taken one on. Or tell them you can if you've got room for it. But don't wait until you're faced with the decision before you have a plan for how to deal with it. Plan so you won't end up feeling pressured or guilted into performing a free service.