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Web development invoice for Finance

hi guys this is james with isotropic and in this video i'm going to be talking about my agency payment stack and i don't know if that is a term i just made it up so now it is a term and essentially what it means is i'm going to be going over every um solution in regards to money processing it storing it paying other people um tracking expenses all of that and i'm gonna just go through every product that my agency uses and that i've found to be really good solutions over four years of building websites professionally so hopefully you can take away a couple of insights from this maybe some good products and services to check out for yourself but here's how i process money for my agency so we're gonna work from getting paid to paying out employees and yourself and everything in between so to get paid as an agency we use three main methods we use ach automatic clearinghouse which is a free bank to bank transfer and we use ach for really big payments for our projects we do a lot of bigger projects and typically take 50 up front which ends up being a very large payment to minimize the payment fees what we'll do is have our client pay us through ach bank to bank goes directly into our banking account which is something i'll be discussing at the tail end of this video and that's that it's a very simple free painless process if ach doesn't make sense to the client or if the payment value is lower we'll use two additional payment processing platforms and we try to stay away from these especially when the payment method is larger just because there are processing fees attached to these companies but we will use stripe or paypal we really try to avoid paypal but i'm a big fan of stripe and there are a couple things you can do to minimize your stripe payments as well so stripe allows you to integrate it really integrates with many different platforms and allows you to process credit card debit card payments bank transfers stuff like that we use stripe on our crm system we also use stripe for our product-based sales which doesn't really relate to wordpress but it's a really great solution if you accept product-based sales due to the fraud protection however stripe costs you money it costs you a processing fee every time you push money through it and i believe that processing fee is maybe 2.9 percent plus 30 cents per transaction and this can actually add up to a lot say for example we're accepting a ten thousand dollar payment that two point nine percent is like three hundred bucks that that really adds up and that's the main reason we try to stick to ach for the larger payments stripe is also just a great platform because it integrates with the bank that we're going to be talking about and there are two things you can do to minimize your payment processing costs the first one is if you don't have stripe when you sign up through a member institution through a through a third party referrer you can typically get around twenty thousand dollars in fee free processing for the year so that's great because twenty thousand dollars would probably equal i wanna say like six hundred dollars in payment processing expenses and minimizing that is just more money in your pocket it's a good good thing to do if you have access to that promotion another method to minimize your costs are if you're a bigger agency if you've definitely outgrown that 20 000 per year processing milestone if you're pushing say 50 000 and up through the platform per year you can then go ahead and negotiate with the company to lower your rates and you do this by hopping on the phone and actually speaking to their representative and asking hey can you lower my rate from 2.9 to maybe 2.5 i push this much money through your platform and in many cases if you actually push a fair amount of money through their platform they will lower your rates for you so if you're looking to minimize that way you can minimize that way the third payment processing platform is paypal and we really try to stay for people because i'm just not a big fan of the company poor support at least in my opinion and high processing fees but at the same time paypal is really a global payment provider you can accept payments in different currencies and easily convert it over to the dollar or whatever currency you use and really everybody uses it to pay and get paid so unfortunately you have to accept it but we try to work from ach to stripe to paypal for larger payments that companies don't want to pay through ach we will accept it through through stripe but we'll also add that 2.5 2.4 that we are are billed for through stripe processing and we'll just tack that on to their purchase price so that's how we kind of get paid the next method of accepting payments is how do we actually initiate the the billing request like how do we get that client the information that they need to then go ahead and pay us and we just have moved away from this solution not because it's bad just because we've outgrown it but i think the best solution and the solution that we've used for around the past three years i want to say is a self-hosted crm and a crm is customer relationship management software um and this tool comes with a lot of different features and that's for another video but it comes with a great payment system payment tracking system if you will and this tool is called perfix crm it's linked in the description there's also a big write-up on it about our experience with the platform really great things all around this tool is used to invoice the clients and it's also used to track our billable hours track the project progress track leads emails phone in phone out all that but in terms of the finance stack we use this to track our billable hours if we're billing on an hourly rate if we are billing on a fixed rate then we go ahead and just use the invoice feature if we're doing the billable hours we will track the hours and then invoice at the end of the period but the main thing we use this finance side of things for is to invoice the customer perfect crm integrates directly with stripe and paypal it also allows us to display the information necessary to make the ac h transfer to our bank which i'm going to talk about in a few seconds but if you're looking for a platform that allows you to invoice customers that you only purchase as a one-time purchase instead of paying for a software as a service uh and you can also track expenses and see money and money out how many hours your employees are working stuff like that perfix crm is a perfect solution for that so that's kind of how we um say hey here's here's the work we did now it's time to pay us and then we send them the invoice and then they either pay us online through the platform which integrates to stripe and paypal and directs them to those processing platforms to pay us or through the ach and then we can also send out payment receipts and it's great for taxes then the next solution in the payment stack is how we bill for ongoing subscriptions so ongoing subscriptions for any website is just a necessary cost and we'll do this in a couple of ways many of the wordpress plugins we have we will use our own agency license and we just subscribe to unlimited licenses and that's a part of the project when the project is completed they have access to our license as long as we continue holding that agency license that's just free if the agency license expires we will send them an email and say hey this license is expiring go pick it up and you can use your maintenance plan hours if you really must for us to go and it and manage this for you we typically will not do an automatic monthly maintenance plan instead our maintenance plans typically consist of blocks of hours that customers purchase so customers would purchase for example 10 hours at maybe 120 an hour they would hold those hours they're good for 12 months since the purchase date and at any point when they want to use them for whatever the case may be they can use those maintenance hours when they need to that's how we do that but then also there are software as a service subscriptions that are necessary costs that will not be able to expire or else the website will stop working and for that we use a tool called appbind and appbind is a unique tool i don't know how new it is but it hasn't been around for a crazy long time we were really one of the first companies to ever use it and what this allows you to do is manage your subscriptions and then bill your clients through a white label interface rather than have the client either sign up for it or you sign up for it and then pay for it and then build a client separately and then get paid for it and as you can tell it's a complicated process if you do it that way what app bind allows you to do is set up a subscription set up a bunch of subscriptions consolidate that monthly cost into one payment that the client makes and really just bill the client on their behalf for that subscription while managing the platform and managing the subscription so take a look at appbind because it's a really powerful tool and if you need to go ahead and get your client to have this subscription but they don't want to manage it or it makes more sense for you to manage it but you still need them to pay for it this is a great solution and really is helpful when you're trying to track expenses uh as well as make a little money on top and by that i mean you can charge a maintenance plan or maintenance fee on top of those subscriptions so say for example you have an aws subscription a zapier subscription and a linkedin ad subscription all things that you are managing through app bind but building your customer through applying so you're not actually paying for it and then rebuilding the customer the customer is just paying for it directly through this system uh you can add a five percent maintenance fee on top of that and it'll just charge five percent on top of whatever that subscription costs paying you for your time of managing these services so that's how we do subscriptions and now the question is where does all this money go because we have our payment processing we're getting money in the bank we have our subscriptions but all this money needs to go somewhere and that's where we come across the banking solution that we use and i think this is really a perfect bank for pretty much any small business but especially if you are in the digital creative industries specifically web design because it's just a really good solution and it's pretty much tailor made for what we do so first let me tell you about my prior experiences with banks and my evolution to get to this bank um i started out with as a personal account when i was freelancing i then ended up moving to for my personal account so i just moved my separate checking account which was still a personal account because i was doing freelancing under my own name i moved to that personal account then when i incorporated the agency we moved to business banking just because i had a checking account with them and figured it would be an easy setup easy move i already had a relationship with the bank in my area but that business banking is really a legacy style of business banking because i'm web design because i don't have a physical location for the agency because my employees are spaced throughout the country i really don't have any need for a bank with a physical location and because of that why would i be paying for business banking when there are better solutions online that that don't charge for the business banking and also offer more features so i began looking for another solution for the agency which had grown in revenue grown in employees and came across a zolo and simple banking both banks which just recently shut down and from that got pointed to silicon valley bank silicon valley bank is created for startups and digital companies like web design companies but it just didn't really meet the requirements that i had and i eventually stumbled across novo banking and this was really the perfect bank and it's the bank that i use now which is integrated with all of my methods of accepting payment so novobank is a normal bank so you can do ach with it it integrates directly with stripe and you can see your stripe payout balance in the novel banking application as well as the web application it also integrates with the paypal account and the app binder account just empties all of the earnings every month from those subscriptions directly into our bank account so that is the perfect place to store all of the payments that's where all of the money goes and it comes with a ton of perks for a company like yours and mine which is a completely digital company that offers digital services we make websites we accept payments online i don't know of many web designers that accept cash payments or barter like i'll take a cow for your website something like that so this is really a great bank it's a completely online bank but because of that it's also a free bank you don't have to pay for this service and we do a lot of monthly revenue and and it's it's worked out very well this bank integrates with a ton of different services it also comes with a lot of perks and literally today it added two new game-changing uh features that i haven't really tested out so i can't speak with authority on them but it looks to be pretty cool first we can track all of our income and spending we can see how much money we made in the specific month that we're in we can download this to a csv we can also export this to money in excel which is the last thing i'm going to talk about and we can integrate it with many popular platforms and tools out there so the integrations would be shopify quickbooks xero quickbooks and xero are both accounting platforms stripe which is you can see the money in your stripe bank account or stripe account zapier and slack so these are integrations created with our type of company in mind which is pretty cool then there are also perks so as i was saying before you get twenty thousand dollars from stripe and fee free processing if you just sign up through the novo bank link uh that amounts to a cash savings of five hundred dollars you also get three hundred three thousand dollars in google cloud credits um hubspot credits zendesk credits segment credits godaddy snapchat ads i mean this is a bank created for people in our industry and they offer offer perks for our industry they also have these two new features that they literally just added so i couldn't try it out but here you can add a reserve which means you can set money aside for specific purchases and then you can also invoice directly through this platform using ach or using the stripe credit card and debit card processing with the ach you can forego any fees so this is a free invoicing tool and with the stripe you get lower fees than at least paypal which is kind of helpful there then with this money with all this money in and out we also have employees so we need to pay the employees and we use novobank to pay the employees too this is pretty easy all you need to do is add a payee and the payee is a bank account of somebody who works for you or who contracts with you and this is very easy you literally just add the payee you set the amount of dollars that you want to send to them on friday afternoon and then you'll send them the money on friday very simple platform if you need to pay people play employees pay anybody that's how we usually do it and then if need be we'll pay them through paypal but again there are fees involved with paypal so we try to avoid that as much as possible the final thing is the accounting systems that we use so i've never used anything like quickbooks or xero or any of those software as a service subscriptions when we were on perfix all i did was use perfix and then i would also track the money and money out with an excel spreadsheet i would use something called money in excel which actually integrates to novo bank and money in excel just allows you to track the income expenses everything like that and we just keep it in a spreadsheet and that was really my job uh and with this new platform that we're looking at for our crm then then that's going to all be automated but it was a pretty simple task with money in excel because web design isn't the most complex business you have business expenses for plugins and stuff like that and then you just have money coming in hopefully and then you pay your employees out and that's really it so i would track all of that and then i just hand it off to the accounting firm and the accounting firm would take care of all the taxes forms stuff like that for me so that's really my financial stack for the agency and i think that pretty much anybody can adopt this be it a freelancer or an agency up to maybe like five people that doesn't do a crazy ton of work a year once you start managing employees you may want to upgrade from perfix but if you're looking for just a basic payment stack i'll go over it again and i'll put up a little graphic on the screen we use ach paypal and stripe to accept payments paypal is the worst but we still have to accept it because everybody uses it stripe is good you can negotiate rates down if you push enough money through them you can also get 20 000 in fee-free processing so that's really cool um for subscription management we use something called app bind and then we also i didn't mention this but we also just use the standard stripe subscription feature which also integrates with perfix if we're doing that so when we were running our own hosting we would use that we don't do that anymore we try to keep people as independent as possible and just have them purchase those maintenance hours if we're paying other people well i'm getting ahead of myself for storing all that money all that cash in we have a business bank account with novo and that noble bank account allows us to pay our employees it allows us to pay myself as the owner of the agency i can draw on it it also allows for integration to stripe to the popular accounting platforms to slack really just a great platform i track everything through money in excel and just use an accounting firm here in charlotte to do my books for me but other than that that's really kind of the simple payment stack that i use i've gone through a lot of iterations here and for me at least in the states this is the best solution there are definitely better payment processors for other international locations but in the states this is what i use this is what i find to be best for me the final thing that i kind of forgot to mention but i should mention is something like a business credit card and this is an option that i need to be considering now because i have employees and i don't want to just give them my novo debit card when you have employees it's important to have them be able to make purchases on your behalf when they need to get the tools to make their websites and we're a very close team so i'm able to pretty much pick everything up on the debit card but as we grow i'm going to definitely be taking a look at business credit cards which allow us to issue specific cards with spending limits to our employees so that's something else i'm going to be taking a look at i'm strongly considering amex simply because i have them for my personal cards so that's just another thing to add on to the stack but if you're looking for business cards credit cards that might be helpful especially if you spend a lot of money and you need to be spending a lot of money if you're pushing a lot of money through your company um that could be pretty helpful because you can earn points get free travel get free rewards all for business all for spending so something to consider there just something i'm not fully experienced with yet so that's my payment stack hopefully you found it helpful i don't think a lot of people know of novobank so it's something to check out completely free and everything's going to be linked in the description as well as a supplementary article that discusses the payment stack in writing hopefully this video is helpful if it was give it a thumbs up give it a subscription and until the next video i will not see you and i will see you in the next video have a great evening