Time and billing dilemmas can put you out of business or simply totally strap your budget. Many people don’t know how to manage time and billing the right way and end up paying for it later. Time and billing requires you to track payment and invoicing. If you do this properly, you will get paid fast and make a nice profit. If you don’t do it right, you may never see payment for some of your efforts. The following are three common time and billing methods and their benefits and detriments.
TIME AND BILLING THROUGH AUTOMATIC CREDIT
This technique for time and billing entails giving everyone a credit amount. This provides low risk, because you only stand to lose approximately $250, and it attracts clients. If you are not clear about terms, most people might assume it is net 30. You need to be firm with this time and billing method and make sure clients know that you expect very rigid deadlines to be adhered to, but even then you can’t guarantee compliance. This method is marketable, but not recommended.
TIME AND BILLING USING MINIMUM DEPOSITS
This time and billing strategy involves a deposit before you start a project with a client. The deposit can be 25% to 50%, and can even be 100% if you are aggressive enough. Collecting the deposit is the easy part, but determining when the project is complete can be more difficult. You need to establish a very clear ending point for the project if you are going to use this method and leave some time for the check to clear between when you collect the deposit and when you start the work.
TIME AND BILLING WITH A MERCHANT ACCOUNT
This time and billing technique is the best one. The first project is completed on a credit card authorization before the project even begins, and a signed proposal or quote is faxed back to you with information from the credit card. You pay just a 2 to 3% fee to the credit card company, but you avoid having to beg for payment. You will not have to deal with checking credit references and taking applications for emergency work, and the credit card charge will probably not be disputed as long as you complete work well.
All methods of time and billing have their pros and cons, but merchant accounts have the lowest risk associated with them and should be used whenever possible.
Blogged By: Joshua Feinberg