Manual invoices cost us all a lot of money

The roof guy finally turned up last week to have another go at fixing the small leak above the study. Nothing serious, in fact at first you had to listen hard to even hear the drip. But once heard it has been hard to get it out of mind. Weeks of wet weather haven’t increased the problem but have amplified the drip and the slow beat seemed to be the same tempo of so many songs from the 80s.

My work rate has suffered with drip-induced trips down memory lane.

Time to get the roof man back to have a fresh look at how to fix this before the rot sets in and causes some other issues. As an aside, I chuckled at the apparent catch 22 of being a roof guy – he can only climb on the roof when it’s dry but can only identify the problem when it’s wet.

None the less, he spent some time raising tall ladders, clambering across the tiles, squirting heavy goo into small cracks and on completion let me know what a difficult (read expensive) job this one has turned out to be.

Out came the dog-eared invoice book. Large workman like fingers tried hard to be delicate with flimsy carbon and folded-back pages and a small pen started its journey across the thin invoice paper. Press hard – third copy is yours!

It seemed to me that the volume of words on the invoice was directly related to the number in the bottom right hand corner of the invoice. I did wonder if all tradies do a stint in learning the language and words of making simple jobs appear complex as a way of lifting their average hourly rate. And at the hourly rate being charged, just writing up the manual invoice was costing me money.

The satisfying sound (for him) of the tear of the perforations as he carefully ripped out the sheet signalled the end of the process and the beginning of another – getting paid. A mumbled request to make a payment in the next week also signalled the beginning of a costly debt collection process for him. It’s not that I’m a poor payer; it’s just that there are lots of other things to attend to and making a payment sometimes slips down the list of priorities especially if it has to be taken care of later.

And herein lies the problem with manual invoices. At its heart, an invoice is the start of the getting-paid process and anything that makes this process faster where payments come in sooner has got to be better for any business. Anything that makes the whole process easier for everyone with fewer steps has to be an improvement.

Calculating the cost of manual invoices

If the roof guy had been able to generate the invoice using a computer or tablet, present the invoice directly to me on screen, with a copy to email, he would have been in a very good position to ask for a credit card and process the payment on the spot. Good for me – one less thing to follow up on and good for him – he can now focus on the next roof job. Friday night footy just got a little bit closer too.

I asked what he did with the paper-based invoice. “That’s Friday afternoon’s job”. Entering the invoice into the back office accounting system was reserved for that gap between the last job of the week and the pleasure of a Friday beer in front of the footy. It’s about this time each week that this tradie values his time the most. Between end of work and weekend fun – this is not a good place to stand and no wonder he thought dealing with invoices was a pain.

It’s estimated that the average cost of generating and managing a manual invoice is $10.98 and takes on average around 34 minutes each. And that’s before any dispute management.

There’s the effort of handling the data several times. Once manually on the door step and again later into the accounting system. There’s the follow up with the debtor. And the further away from the completion of the job the less valuable the job appears. Asking for payment well after the completion is sure to bring out any germ of resentment. Being paid quickly has to be the nirvana of every tradesperson.

There’s the issue of record keeping. How many invoice books are misplaced each year with the risk of relying on memory and a manual diary to recreate a weeks’ worth of data? And how many manual invoices miss making it to the accounting system or make it with incorrect data?

Manual invoices are increasingly seen as a little less than professional, too. Perception of your client to the way you present your business paper work is part of the overall impression about the value of your job or service.

There are lots of ways of generating a simple electronic invoice. A word processor is the simplest but of course suffers from being disconnected for your accounting system. There are simple web based systems (like MYOB LiveAccounts) that work inside a browser and, as long as there is a connection to the internet, the invoice can be presented on the job.

Reducing the cost of invoice production and increasing the chances of getting paid have to be compelling for any business. For my roof guy, not having to dance with the carbon paper and getting to the game earlier on Friday are probably reasons enough.

What do you use in your business?  Manual or electronic invoices?  Do you plan to move to an electronic invoicing system, or stick with manual? Are there any roadblocks within your company that are preventing upgrading to an electronic system?

READ: Get paid faster with invoice reminders

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  • Nice post, Tim! You really got me in with your writing and your story. Before I knew it, I was learning stuff. Your topic reminds me of a post we did a while back – which totally supports your argument. Not sure if you encourage links, but here goes: Best regards, P. :)

    • tim molloy

      Thanks Paul. Love your blog about Kids in the Kitchen too. This scenario – of kids being around the new venture is exactly how many businesses start. Love to make the links too. Cheers, Tim

      • Thank you, Tim. I’m a big fan of linking to whatever’s relevant. If readers dig your scene, they always come back; there’s no need to railroad them. I’m glad we’re on the same tram! :)

  • I agree with Paul – what a great post! I especially like the part about the catch 22 – only being able to find the problem in the rain, but can only fix the problem in the dry. We’ve had similar issues getting various services/appliances fixed at our place :)

    You highlight a great way to save time here Tim, especially considering tradesmen so frequently use the manual invoice book. A tablet or electronic device that could invoice and accept payment on the spot, while having a bit of an investment at the start, would save so much time and effort. And you can’t put a price on more time down at the pub! And imagine the environmental saving of being able to email your customers, instead of providing them with a hard copy paper invoice?

    Looking forward to hearing more from you :)

  • Jason Call

    Hi Tim,

    I love your post. Unfortunately I am one of those tradesmen your writing about. How does on such person learn more about the systems you suggest???. I have just started using MYOB Accounright Plus. Can I Set this up to be a system as your suggesting.

    See the problem is most of us tradesmen can lift heavy things.. but computers scare the s**t out of us!!

  • Thomas

    Hi There,

    I use LiveAccounts and it works really well for me. The only problem I have is that I want to be able to generate an invoice a smart phone/iphone/Ipad or any portable device. Booting up a laptop is not so sexy compared to switching on your iphone – tap tap tap, invoice emailed to customer. I do a lot of repeat invoicing….select customer / enter product code / enter quantity then SEND.

    They are working on a “mobile” solution but I won’t love their product until it’s available.

  • Hi Tim, great article! Glad I had a chance to read it before our interview today on Red Tent Radio. You make a great point here and one that many small, micro and solo business owners need to adhere to. Thanks again. Ludwina Dautovic