Invoicing is often dismissed as a mundane task that need not be done with full attention. That is true, but it is an important part of the business that is essential to maintain a positive cash flow. As a business owner, you must realize that your duty does not end with just sending an invoice.
Automation of various tasks with the usage of online accounting software will take a load of your back and help you manage invoices in the most productive way.
To make sure you get your money on time, here are a few things that must be avoided.
As a business owner, it can get awfully difficult to manage so many various tasks on time. It is not uncommon for a small task such as invoicing to slip your mind, or you may think that a regular client or customer will make the payment anyway and push the task ahead.
But you need to remember, that invoicing is your responsibility. One must make it a priority and send an invoice as soon as the job is complete. According to a survey, when you invoice on the same day of the work completion, you are 1.5 times more likely to get paid on time.
2. Pending Invoices
Now that you have made a priority to send invoices, it is also very much possible that the client misses their due date, misplaces the invoice, or simply forgets about it. You and your team have to take responsibility to get paid on time, so be proactive in sending reminders and contact the client immediately if they miss their payment date.
In a rare case where you are dealing with a terribly unresponsive client, extreme measures can be taken. A case can be filed in small claims court, or if matters get worse, you can hire a collection agency to get your payment.
3. Undefined Terms
Business dealings must always have clearly specified conditions which come in use, in case of any discrepancies. Never use vague language in an invoice, specify your terms and resulting consequences if those terms aren’t met. But do not define lengthy and unrealistic terms that can hamper business relations.
To create an ideal situation, sign a simple contract with your clients that will protect the interests of both parties. Bring this into practice and you will ease up a lot of your workload. Ask your lawyers to record your agreement and make it official.
4. Details that Matter
Precise attention must be given to details so that small mistakes are avoided. Check with your client on whom to send the invoice and draft the mail accordingly. Billing a different individual or department can create a lot of miscommunication and waste your precious time.
An invoice must always contain these details:
- Legal company name, office address and contact number
- Client name and address
- Invoice number and date
- Payment due date
- Tax number or license numbers, as per government demands
- Terms of payment
- List of products or services
- Total amount to be paid?
5. Data Backups
In this age of technology, it seems unwise not to take advantage of it. Create regular backups of your receipts on the cloud, so that you have a soft copy to refer to, even if you lose the hard copy. Use applications like Quickbooks cloud to keep track of your data and enable remote access to your finance reports.
6. Branding and Format
Research has shown that invoices are 3 times more likely to get paid if there are a proper company logo and name mentioned. These small things show that you are professionals and it creates your executive image over the others.
Also, the same goes with poor editing and format of the invoice. Spelling mistakes, incorrect amount, incomprehensible fonts, all these mistakes must not be made. Double check your invoices before sending them.
7. Flexibility and Payments
You have set up your payment terms, well done. But being a businessman does not mean that you need to be harsh over rules. Sticking to them is important, but every now and then, you can offer a bit of wiggle room, on client’s request.
In terms of payments, you must offer options for safe payment methods for the convenience of your client, and efficient workflow for both you and them.
Being polite is the most important thing to run a successful business. Adding a ‘please’ and ‘thank you’ to your tone, emails, and even invoices can increase your chances of getting paid by 5 percent. This will also boost your brand image.
With the rapid technological advances and its integration in the accounting industry, usage of sophisticated application like cloud-based QuickBooks helps profusely. It streamlines the workflow and helps keep track of incoming and outgoing cash. Keep these points in mind to get your payment on time from clients.