Why Your Invoices Are Being Ignored: 5 Common Mistakes Inflating Your DSO

Payment delays are not only frustrating, they put your consulting business at risk. When your Days Sales Outstanding (DSO)—the average number of days it takes to collect payment— increases, your cash flow slows, restricting your ability to make payroll, invest in resources or handle unforeseen events.

If your end of month billing involves compiling spreadsheet data and manually formatting documents, the delays are more likely caused by your invoices themselves, rather than your clients being slow to pay. Here are the the 5 most common invoicing mistakes that lead to delayed payments, and how to fix them:

1. Lack Of Line Item Details On Invoice

The most common reason for a disputed invoice or delayed invoice payment is lack of line item detail. If you use general terms to describe work or an expense, you are inviting questions from your client’s finance department, leading to delays. They need to be specific when justifying expenses, so think of your line item detail as a way to help them do that.

The most effective way to accomplish this is to use a dedicated time tracking solution like Projectworks that pulls detailed time and expense data directly into your invoices.

2. Sending The Invoice Too Late

If your consulting firm’s "Billing Day” is actually “Billing Week”, you are not only hurting your cash flow, you are reducing the client’s urgency to pay the bill on time. Invoicing delays signal to your client that payment is not a time—sensitive matter, despite the contract terms.

Invoicing speed is critical for cash flow and client trust. Using an integrated invoicing and billing software solution like Projectworks enables you to generate, approve and send an invoice as soon as the project is complete greatly reducing your days sales outstanding and signalling to your client that you are ready to be paid now.

3. Math Errors Leading To Audits

Even a small calculation error in your invoice can trigger a full audit of every line item. This not only causes a huge delay in payment, but erodes client trust and your firm’s professional reputation.

Every professional firm should be using automated invoicing and billing software to handle the calculations involved in an invoice - tax rates, discounts, expenses and line item totals. Every billing cycle done manually with spreadsheets puts your consulting firm’s reputation and cash flow at risk.

4. Scope Creep And Budget Overruns

Sending a client an invoice that is 20% higher than the initial quote is a sure way to get flagged by their finance department. Even though the work was requested, not having documented approval for that work causes a communication breakdown between you, the stakeholder and their finance team, which must be sorted out before the payment process starts up again.

Using PSA software with integrated budget tracking, invoicing and billing will surface budget overruns and work approvals, preserving the paper trail all the way to invoicing.

5. Incorrect Formatting And Routing

If you are emailing a PDF to your stakeholder, who then forwards it to their finance team, it may sit in their inbox longer than necessary. And if your invoice format is unprofessional, it may even be mistaken for junk, or routed directly to their spam folder.

Using automated billing software with invoice templating ensures that your invoices look professional and are formatted correctly every time. And with CRM system integrations, you can be sure your invoices are being received and read by the right person.

Reduce Friction And Get Paid Faster

Reducing DSO and improving cash flow are all about getting paid faster. Most payment delays are caused by friction and communication issues caused by the manual process of creating invoices manually with spreadsheet data.

You can automate your invoicing process starting today, with a free trial of Projectworks. Or, let us demo Projectworks for you, and start getting paid for your work faster.

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