Preparing invoices might be one of the most important tasks you perform as a small business owner.
After all, business invoices are the first step in generating the income your business needs to run smoothly.
When small business invoices are done correctly and professionally, sent promptly and followed up on regularly, your cash flow will be healthier.
What you don’t want is to have a slew of business invoices that are not getting paid.
Implementing good invoice habits helps ensure you’re not sitting on a bunch of unpaid invoices and minimizes the need to maintain records of late payments for you to follow up on.
Avoid surprises- make sure your customers know ahead of time when an invoice will be sent, clearly spelling out charges to avoid confusion. Your business invoice should match your original estimate and contract, which conveys predictability to your customers. If the invoice total exceeds the estimates or the agreed amount, or there are new charges, explain the difference to customers before you send the invoice.
Get dates straight- the invoice’s date should be the first thing visible after your contact information. The date should be prominent, letting customers know when the payment is due. Also, make sure that dates for completion of work or delivery are part of invoice item descriptions.
Follow up on overdue invoices and payments- If you haven’t heard from your customer after sending an invoice, follow up with payment reminders. Sometimes mailed invoices can get lost, and emailed invoices can end up in a customer’s spam folder, innocently causing a late payment. Once you know that a customer has received an invoice, start tracking the days and weeks until your payment due date, which should be clearly stated on the invoice (15 days, 30 days, etc.). Clear payment term with a deadline is essential because it gives you a basis for follow-up in case of non-payment. If you don’t clearly state the expected payment date, it’s easy for customers to put your invoice at the bottom of their bills pile. When the due date has arrived with no payment received, resend your invoice and add a note that it is past due.
Make sure your invoice design provides clarity- an invoice is an important public face for your business to your customers. It should showcase your brand and include identifying features such as your logo. But the content is more important than the visuals. Make sure that above all, the information is clear and easy to understand.
Make sure your invoice is detailed- in some areas of customer communication, less may be more, but not when it comes to small business invoicing. Listing itemized products or services, fees, expenses, costs, and relevant dates not only reduces disagreements but ensures you’ll be paid what you deserve and that your customer understands the value you’ve delivered.
Being timid about sending business invoices- asking for payment can feel awkward, especially when you’re just starting out in business. When you confidently seek payment for your services, you show customers that you value your own work and believe in the products and services you’ve delivered.
Delaying- customers should receive invoices while the product or service is fresh in their minds, so that the invoice isn’t an unwelcome surprise. Invoicing promptly displays professionalism and confidence, sending the message that you likewise expect prompt payments.
Are you wondering if you should send a paper invoice, or send the invoice electronically with online invoicing? The easiest option is to generate invoices using invoicing software or an invoicing app.
Printing or emailing manual invoices created in word processing software comes with many downsides, including lack of expense tracking/reporting and manual calculations. Printing also increases the waiting time for check or cash payments.
For example, a significant benefit of digital invoicing is “digital trails” that tend to be more reliable than “paper trails.” It’s easy for you or your customer to lose a physical invoice and have no other record of it.
When you generate electronic invoices– especially if records are stored online in the cloud– the files are easy for you or anyone else with access to the system to refer to when needed.
Digital invoicing tools can integrate with financial, accounting, inventory, and other software tools, making it easier to create, access and track your full business processes, as well as collect necessary information, come tax time.
Digital invoicing tools also offer an invoice template that you can easily customize for your business. This ensures that your invoices maintain a consistent and professional look and represent your brand well.
Whatever method you choose, avoid simply dropping a list of charges in an email. It’s not a very professional presentation, and it’s too easy for information to get chopped up or lost as the email gets forwarded to the right person for payment.
Our expert team of accountants can provide you with invoicing templates and advise you on using software such as QuickBooks and Xero. We can also complete invoices on your behalf if desired, integrating this with your accounts and providing up to date aged receivables.