As a freelancer I have been doing business with companies for a long time now, during which I have come to see few common mistakes they tend to do concerning invoicing.
Most small business owners would agree with me that accounting is their least favorite task to do. Plus, invoicing seems like a boring, repetitive task that does not require full attention. In order to keep your business’s cash flow healthy, it is crucial that invoicing is done properly.
Here are some common invoicing mistakes to avoid:
Not sending or forgetting to invoice on time – One of the most common mistakes is not sending invoices at all or not sending them on time. Often enough, teams are very busy with completing their tasks and getting the job done, that once they finish it they forget to charge for it. This causes a delay in payments and the whole business suffers. Using an invoice scheduling feature is very helpful in sending out invoices to clients on time. The best time to send out an invoice is immediately after completing the project/service.
Sending invoices to the wrong person – Sending out invoices to the wrong person/email address or department is also very frequent. This means resending the invoice, wasting a lot of time and delayed payment. Make sure to get the correct billing details from your clients.
Having unclear terms – Using vague language is not recommendable when invoicing. Especially because the client may not understand what you are charging for and ignore the invoice. Make sure that the item description, prices, and quantities are clearly stated. Also, clearly state the due date for payment and any consequences or interest on late payment if the terms are broken.
Missing details on your invoice – In order to prevent any misunderstandings, and depending on your company’s and client’s jurisdiction, your invoice should include the following details:
- Full legal company name and number
- Office address
- Your client’s name and address
- Invoice number
- Invoice date
- Any tax numbers required by local law
- Payment terms
- Contact details so your customer can reach you if anything is unclear
Not storing a backup – A backup of the original invoice must be kept for future references. Online solutions like Envoice help you keep a PDF copies as well copies stored in the cloud.
Unprofessional invoicing – Spelling errors, incorrect amounts, Excel formatting can make your business look unprofessional. Involves that are created poorly tend to be more often ignored and not taken seriously. Using online tools, like Envoice, can eliminate mistakes and customize the creation of invoices with company branding on them.
Not using your invoices as a marketing tool – Besides being a tool for payment, invoices can be used as a marketing tool as well. Since they are read through with great attention, invoices can be a great way to market to your existing customer base. You promote a new product or service at the end of an invoice or offer a discount for further purchase. You can even offer a referral incentive for recommending your company to friends.
If you take into account the above points, your payments will be faster and you can increase your future revenue stream. One other important thing that owners should pay attention to is following up on unpaid invoices. Even if your invoicing process is spotless, there will be times when clients miss the due date or simply misplace the invoice and forget about it. Sending automated reminders about unpaid dues, or contacting them is your responsibility.
After all, you finished your part of the deal and you should be compensated for it.