Contributed Column

The Manager's Corner

by Emily Morrow

The fine art of billing: What you really need to know

Billing is more art than science —it calls for professional judgment. Few businesses train their employees about when and how to bill. Here’s how to improve your “billing hygiene.”

The truisms

Optimal billing behavior consists of the following:

• If you start feeling uncomfortable about something in the billing process, lean in toward it. Do not go into denial.

• No matter how wrong the client is, the client is always right.

• Be sure you never win a battle about a bill but lose the war.

• It’s more important that your client feel positive about the whole experience of working with you (including billing) than that your bill be paid in full.

• Nothing is more valuable in your professional life than your reputation. Don’t let a client who is disgruntled about a bill besmirch that.

• Be detailed in describing what you have done. Clients feel better about paying bills that show detail. On the other hand, don’t be overly “picky”; that can irritate a client.

• Bill frequently, don’t let the account balance get too large, and don’t bill until the client has received some work product from you.

• Follow up within 30 days after you’ve billed the client if payment hasn’t been made. Communicate first via email or letter, and if that doesn’t get results, make a phone call. If that still doesn’t work, raise the issue with the client in person next time you meet with him or her. Don’t let it languish: Either get the bill paid or write it off within no more than 90 days.

Some common billing issues

• It’s better to give a “not to exceed a certain amount” estimate than a flat fee. You’re less likely to lose money that way.

• When you give an estimate, always estimate high; things always take longer than you think.

• Give a binding quote only on matters that you know will take a certain amount of time based on your experience. Perform the unique and complex matters on an hourly basis if possible.

• Don’t low-ball an estimated fee to get a job. If you do, it will be a race to the bottom.

• Think before you communicate with your client about a billing concern. Calm down and choose your words carefully. Address client concerns early, often, directly, and transparently.

• Consider whether to communicate your billing concern to the client via telephone, email, in person, or hard-copy letter. Don’t rush or avoid the discussion. It could be one of the most important discussions you have with a client. Do it yourself; don’t delegate the job to an underling.

• If there’s a billing problem, let the client know that your primary concern is that he/she be entirely satisfied in working with you and your company and that you will do whatever it takes to make sure he/she is happy with the result. Tell the client it’s important to you that the amount paid for the work you did is commensurate, in the client’s opinion, with the amount billed for the work. Encourage the client to pay only that portion of the bill that he/she deems to be per the above. Usually, clients/customers will pay close to 100 percent of the bill after you say this, and they will happily extol your virtues in the community. You may lose a bit of money on this particular matter, but you will have gained a lot of profitable good will longer term.

Most professionals work hard and do good work for their clients. However, some are more successful than others in getting their bills paid in a timely manner by happy clients. Remember: It takes less time to handle a billing matter well than to mishandle one. Mastering the fine art of billing makes all the difference. •

EMILY MORROW, JD ( of Shelburne and Auckland, New Zealand, provides consulting services to business owners, professional practice firms, executives, and HR personnel.

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