Invoices may be just an afterthought to you as a business owner but, for small business, getting it wrong can potentially be fatal. If you aren’t clear enough in your requests for payment, you can easily fall victim to money problems as funds that should be supporting your company are, instead, still with your customers.
So, here is a walkthrough to creating clear invoices and managing invoicing well. Follow our lead and you can be sure of far easier payments as you carry out your business.
Putting Together Your InvoiceYour invoice serves two functions. It is, first and foremost, a document detailing payment for specific services. You need to ensure you include all the relevant details so that it is clear and easy to reference for both you and your customer. It is also a representation of your company’s image. It should reflect your branding and come across as a professional and well presented document in fitting with the rest of your company’s stationary and other materials.
You may want to work within a design template. To make sure you end up with an invoice that fulfils these needs, ensure each invoice includes the following:
1. Full details of the serviceEnsuring the customer knows just what they are paying for and the date this was provided. Be clear and precise with this information. State the exact nature of the work carried out as an itemised list. You should also include fees for each aspect of the service or products you have provided. This way, you avoid confusion that may delay payment. You also benefit from much clearer referencing when it comes to your accounts at the end of the year.
2. Contact DetailsBe sure to address the invoice to the relevant person. When dealing with bigger companies, they may require invoices be sent to a specific department or even a third party. Don’t have your invoices getting lost because you did not send it to the correct location.
Also, you should include your relevant contact information to allow the client to contact you easily should they need to query something.
3. A Unique Identification NumberYou need an identifying system for your invoicing both for your sake and your clients’. This way, both you and your client can easily refer to the necessary invoice should a problem arise.
Make sure this number is clearly visible, ideally at the top of the page. Alongside this, you should include the invoice date as well.
4. Payment DetailsAnd not just the requested amount. You need to clearly state your payment method and requirements. If you need a bank transfer, you need to include the necessary bank details, including international details for overseas transfers.
Finally, make sure you state a clear date for payment to be made by. Anything too open can be left open to interpretation and exploited and you can be left out of pocket and chasing up late payments. With a clear date for payment, your expectations are clear. You will also have stronger grounds if you do have to chase late payments.
Make Invoicing Part of Your Business PracticeOnce you have a template for your invoice, you then need to make sure you are being professional in how you manage your invoicing. This means more than simply recording the details in the books or with software. Your invoice should not be just a formality you send out after every deal. You need to put good invoice practice higher up in your priorities.
Go into a transaction with upfront information regarding your invoicing terms. You will then cut down on time waiting for payments later on. Explain how you expect to be paid and within what time span as you set up the deal to enable customers or clients to prepare the fees beforehand. This eliminates surprises and confusion when the invoice is received and makes it more likely that funds will be ready to pay you on time.
Have your invoice system in mind when in talks with a new client. If you learn that a customer has a poor credit rating, you may need to consider whether you should adjust your invoice terms to guarantee a higher return. You may offer a longer payment term or higher deposit, for instance. If you make this decision right away you can then budget accordingly to reduce the strain of this adjustment.
Having a clear practice makes it simple to manage your accounts. Clarity and consistency in your invoice documents make processing much simpler and helps with simplifying tax and other finance records for use in the future. Should you decide to bring in someone to take over your finance and invoice admin then a strong company practice will be easy to teach.
Invoices are often left out when planning your business operations. Strong invoicing documents and management can, however, ensure smooth running of any business. Your invoices are your means of getting paid. It makes clear sense to make them a priority.