Invoicing is among the most important aspects of operating a small business. However, it can be such a big hassle at times- particularly if you are a start up company and new to the process.
So what is the best way to avoid having to spend so much time on the minor details of generating and sending out invoices and needing to chase late payees down, so that you have more time to focus on the important aspects of your business?
Looking Professional – Stay Consistent With Your Brand
Whenever you are generating invoices, it is very important to ensure that they look as sharp as possible. If you send a customer something that has an amateurish and cheap appearance, they might not feel so inclined to pay you as fast as if they receive a more professional-looking bill.
Make sure that your invoices have your logo on it and also ensure that the amount you are owed is clearly spelled out. Your brand should be reflected in the wording and colours of the document. For example, if you happen to be a copywriter and using plain English is something you take great pride in, don’t add a lot of legalese to your invoice. Save that for your terms and conditions, or have a good lawyer translate the legal terms into plain English.
Keep Things Legal
You want to ensure that your invoice is correct and in compliance with VAT requirements and with company law rules as well since it is a legal document. If your business is a limited company or LLP, your business’s registered number and address should appear on the invoice. It should also show any directors or members as well. Fortunately, if you are using an online accounting system, it will all be done automatically for you.
Consider The Numbers
According to HMRC rules invoices are required to have “unique sequential reference numbers.” However, the same sequence does not need to be used across your entire business. For example, a different sequence can be used for every project or customer.
Select Your Pricing Structure
There isn’t anything illegal that prevents you from requesting a deposit from your customers, or for full payment upfront prior to you doing the work. It confirms that your customer is committed to the project as well as being easier on your cash flow. It also helps to spread financial risk between your customer and you. If your customer isn’t required to pay until the work is complete, and then refuses to pay or disappears, you won’t have leverage any longer to stop the work- since it is done already.
If you are concerned that you may lose customers by asking for an upfront payment, then think about offering your customers a money-back guarantee if they aren’t satisfied with the service that you provide.
Make Sure Your Payment Terms Are Clear
Before doing any work, you should have informed your customer about what your payment terms are. However, it still is important for this information to be included on your invoice.
If you have a 30-day payment period set and are expecting your invoice to be paid by the deadline, be sure this information is included on your document to make things as clear as possible to ensure that your client sees it. Also, if you plan to make any late payment penalties or charges, be sure to make them as clear and prominent as you can directly on the invoice. That way your client will have a reminder that the bill needs to be paid promptly. Here are some good tips.
Follow Up On Invoices Right Away
Get into the habit of doing your bookkeeping at least once a week. You should invoice at least that frequently. Your invoices should ideally be sent out as soon as you have completed the work (unless your customer already paid you in advance). That way, it will be one less thing that you need to worry about. However, hopefully your customers will be pay you sooner than that.
Also make it as easy as you can for your customers to pay. Include payment details, such as an online payment link or your bank account information, either on your covering email or on the invoice itself. If you use a specific invoicing system for generating and sending out your invoice, check to see whether you can set automatic emails up to follow up on late payers. That will help you save additional time. If invoicing a different country then consider appointing a process agent to sort your dealings in case of arbitration or other issues related to contracts.
Get A Technological Boost
Remember that it isn’t necessary for you do your invoicing from scratch on your own. If you can possibly afford it, you should invest in specialist accounting or purchase management software to make this process much easier and convenient.
It can be especially useful if you will be send out invoices on a regular basis to the same client (for example, a monthly retainer fee) and would like to set up recurring invoices that are automatically sent. Or if you want to include multiple expenses and would like to easily and quickly attach digital copies to your invoice of your expense receipts. If you would like your client to pay faster, you might want to include a link to Stripe or PayPal, or some other online payment option so that they can pay you with one click of a button.
Be sure to do your homework first and check out all of the different options that are available to you to figure out which system will work the bet for your business’s requirements and you. Over the long run, it can help to save you many hours of hassle and administrative work.
Invoicing is a crucial aspect of any business’s administration, since without invoices there isn’t a way for your customers to know how much to pay you, and if you don’t have money coming in, your business won’t be able to survive for very long!