How to Avoid Invoicing Mistakes
The goal of any business is to get paid for work being completed and on time. This is done by making and sending invoices to clients. If invoices aren't sent properly or even missed, money may come in late, or in the wrong form of payment which can lead to added hassle. There are a few invoicing mistakes that can be avoided, these can improve the likelihood of you being paid on time and in the right way.
What are the mistakes, and how can I avoid them?
There are several mistakes that can be made, and this may not be a comprehensive list that will work for every business. But by following the tips outlined here, you'll be on the right tracks.
Not having payment terms
Payment terms are when you expect the payment to get to you. They are often written as Net 7, 10, 30 days. This means that you expect payment in 7, 10 or 30 days from you client.
A common mistake that small businesses make is having terms that are too long. If your payment terms are 30 or 45 days, you may find yourself strapped for cash because most clients will wait until the end of the window in which to pay you. Making it so that your terms are 7 or 10 days can improve the cash flow in your business.
Some suppliers even offer a discount for early payment which can help improve the speed you receive the funds.
Not specifying payment method
If you only accept payment by card or BACS, then specify it; otherwise, you may end up with clients sending you cheques or paying by cash. Be clear with what you expect and explain how you want the payment to be made.
By making it clear how you expect the payment to be made, it can save an unnecessary hassle on your part, or on the part of the client.
Not sending invoices in a timely manner
It stands to reason that if you send your invoices on time, you'll get paid on time. If this is something you struggle to find time for when running your business, it may be worth you hiring a bookkeeper. Alternatively, our sister company QuickFile makes accounting easy and takes the hassle out of sending invoices.
Not following up on invoices you've sent
Sometimes clients may forget to pay your invoices, we're all human after all. So it can be worth sending them a reminder of the invoice a few days before it's due to be paid. It may be necessary to follow up on these reminders. After all, you're not bothering people, you're just chasing what's owed to you.
Remember to be friendly when you're chasing payment though, there could be a misunderstanding or good reason why they haven't paid. Let them know that you're just wondering why they hadn't paid and if there's a mutually beneficial solution to the problem.
If you fail to follow up on unpaid invoices, you're missing out on money that could be in your pocket. This can harm your cashflow and lead to difficulties in the business.
Invoicing, and receiving payment for the invoices, is a key part of any business. You need to stay on top of it so that your cash flow isn't affected by lack of payment from clients. By following the tips outlined above, you're on your way to ensure your business will be on a good footing with the basics of invoicing and getting paid on time.