Three Reasons Your IT Business Will Crash and Burn Without Effective Client Billing

Richard Tubb

client billingDuring my work with IT Solution Providers and Managed Service Providers (MSP’s), one of the biggest challenges I often see is the inability to bill clients for completed work in a timely fashion.

Admittedly, I don’t that issue for too long within the same company, because those IT companies who fail to bill in an effective manner usually go out of business in short order.

It seems a no-brainer, right?

You do the work, you bill the client, and you get paid.

Why is billing so difficult to do?

But getting the billing done seems to be a stumbling block for lots of IT companies. Those of us who are primarily Technicians tend to want to get client work done - solving a problem or making life easier, bask in the heroes adulation bestowed on us by the client, and then move onto the next challenge. Somewhere in that process we forget to charge the client for the provision of hero service, and suffice to say, it causes a whole heap of problems.

If you’re one of those people who is spending their life with post-it notes, e-mails and Smartphone notes scattered around in a vain attempt to remind you to bill - you’ll know the feelings associated with not billing on time.

And they aren’t nice feelings.

If you don’t bill on time, you’re likely to face three very real issues.

Cash-flow problems

If you're not billing clients, you’re not bringing in money. If you’re not bringing in money, you can’t afford to cash flowpay your businesses bills - or, importantly, yourself.

If you don’t pay your business bills then your suppliers are going to get irritated with you very quickly. Expect stern letters, awkward telephone calls, and withdrawn credit accounts that make it harder for you to help other clients going forwards.

If you don’t pay yourself from your business, then your partner and/or family at home is going to get irritated with you very quickly.

I’ll leave you to work out which one is a scarier proposition to you personally.

The bottom line is, don’t leave it until the business is about to run out of money before you bill your clients - it might be too late.

Billing accuracy

The trouble with completing one job and quickly moving on to the next is that unlike computers, humans forget things.

We forget exactly why we were helping a client out with an issue. We might forget how we solved the issue. We might forget how much time we spent solving the issue.

When you do get round to billing the client, you forget the details of the work. You take a “best guess” at the details of the work and then hope the client doesn’t pick you up on any mistakes. Worse, you let the embarrassment of billing a client late, or the worry that the client will call your bluff and pick you up on a mistake in the bill, and you decide not to bill at all - writing off the work.

The vast majority of us enjoy working within the IT industry. But working for the love of what you do alone? I’m going to guess that like me, you’d preferred to get paid for what you do.

It’s worth adding that rest assured, if YOU forget the details of the work, your client almost certainly will too. Send a bill even a few days late and the gratitude the client felt when you eased their pain and solved their problem will have subsided. They might even start to feel resentful for paying you for something they don’t remember the benefit of.

In conclusion – accurate billing isn’t a “nice to have” for a business, it’s a “must have” for your relationship with suppliers, clients and those in your personal life.

Lack of Professionalism

You might be the best IT company in the world, solving problems all day long, making your clients lives easier, and generally being an IT super-hero.

But if you don’t bother to bill your clients in a timely fashion, they won’t respect you as much. In fact, tardy or inaccurate billing screams one thing about you and your business – a real lack of professionalism.

If you’re not billing in a timely fashion, then you’re not behaving in a professional way and you shouldn’t expect your clients to behave professionally with you either.

Bill your client in a timely fashion, and expect to be paid in a timely fashion.

Bill your client late, and don’t be surprised if your client pays you late.

How to bill in a timely fashion

If you don’t want to experience cash-flow problems, if you want to bill accurately and be paid on time, if you want to be perceived as a Professional business - then it’s quite simple - Bill on time.

Implementing a Professional Services Automation (PSA) system or a Customer Relationship Management (CRM) system will help you track your time. Once you get into the habit of tracking your time effectively, you can bill effectively. Once you bill effectively, you’ll start to earn greater respect from your clients, stop worrying about cash-flow, and see a big jump in your business and personal income.

Simply put, running a business that doesn’t bill in a timely fashion is not sustainable. If you’re not billing a timely fashion, make doing so your number one priority – and do it now before it’s too late.

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As the former owner of an award winning IT Managed Service Provider, Richard Tubb works with MSPs to help them increase sales, take on employees and build up relationships with key industry contacts. You don't have to do it alone any more - contact Richard and have a chat about your needs and how he can help you.

 

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