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When to Invoice: Before or After a Job?

Sometimes, small field service business owners miss the little things. After all, many days are spent in the field helping your team. When your team punches out for the day, you have to spend considerable time managing the financial part of your small business, from balancing the books to signing paychecks.

One of the most important tasks that business owners face is sending invoices for their work. The question is when do you send an invoice: before or after a job?

You have three options for the timing on your invoices:

Option 1: Invoice Before You Start a Job

Sending an invoice before the beginning of a job often works well for small-scale projects. There are some pros and cons to invoicing before a project begins.

Improved Cash Flow

Receiving money before you complete a project improves your cash flow. You can use the money you receive for a project to make equipment and materials purchases, instead of making the purchases on credit. For small field service businesses, strong cash flow can provide the finances to bid on many projects simultaneously.

Cements Your Commitment to a Project

If you receive compensation for a project before it begins, you have made a legally binding commitment to complete the job in a timely matter. This invoicing arrangement can backfire, as some small field service business owners use the money to fund other projects. The reception of cash before a project begins can improve cash flow but can also reduce discipline.

Working with an Anxious Client

It’s common for a person get anxious when they give someone some money before they receive what they’ve paid for. The same principle applies to small field service business operators that receive money for a project before a project begins. Anxious clients add stress to already stressful projects.

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Option 2: Invoice After You Complete a Job

Most often, field service businesses send invoices after a job is complete.

You May Not Get Paid

Invoicing after a completed job leaves small service business owners susceptible to receiving nothing for their efforts. After you finish a project, the incentive for customers to pay you decreases considerably.

Incentive to Exceed Customer Expectations

Sending out an invoice after a completed job represents the stick and carrot approach to managing your cash flow. By waiting to bill customers, you create an incentive to perform jobs well beyond quality expectations of your clients.

Option 3: The Best of Both Worlds

Small field service business owners don’t have to accept an “either or” invoicing process scenario. Why not reap the benefits of invoicing before and after complete projects? First, request an upfront payment that provides you with enough financial resources to purchase equipment and materials. Twenty-five percent represents a common down payment expense for customers. Then, stipulate a final payment that covers the completion of a project.

Whether you invoice before or after a project, make sure to clearly present the financial terms of the project in a legally binding contract. Moreover, use invoicing process software to keep track of invoice submissions and payments. Invoicing software includes features that automatically send out invoices, as well as alert customers to pending due dates.

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