Invoicing is an important part of your business’s overall success. If you aren’t sure how to invoice correctly, you could be inadvertently impacting your company’s bottom line in a negative way.
There are several reasons why your invoicing system is important. Knowing how to invoice properly really does affect your company’s cash flow. It affects how clients view your company and whether or not you get paid in a timely manner.
When invoicing a client, be sure to use a professional invoice, include all the relevant information — including the due date, and follow up promptly if payment isn’t received.
Use A Professional-Looking Invoice
Sure, you can whip up an invoice on a Word Google document. However, professionalism is key when billing your clients. Invoices that are haphazardly put together send a message that your billing department is unorganized and careless.
Conversely, invoices that look professional and organized send a subliminal message that you’re serious about your company’s success. The formality of a professional invoice shows that you intend to collect payment promptly.
Professional looking invoices are available on dozens of time tracking programs, from Quickbooks to Harvest to PayPal. Instead of reinventing the wheel, find a software or cloud-based program that can help you create invoices that command the attention of your clients.
If you do use Word or Excel to send invoices be sure to print them as a PDF. Don’t send the actual Word document to the client because it can be changed, which may lead to disputes.
Send Invoices Promptly
So when should you invoice your client for goods or services rendered? The answer is “promptly”. Invoicing as soon as services are completed is ideal. You want to get paid while your client is still thinking about how valuable your work is. The longer you wait the higher the likelihood that the work you did has fallen off the radar.
I wouldn’t recommend invoicing any later than at the end of the month in which the service was completed or the product shipped. The longer you wait to invoice, the stronger the message you send that says “pay me whenever”.
Know Your Clients’ Preferred Method Of Paying You
Another key tip to invoicing successfully is to know each client’s preferred method of pay. That way you’ll have a good idea of how payment will arrive. In addition, you’ll be able to offer similar payment methods if there’s an issue with a client’s preferred method of payment.
Know Each Client’s Billing Cycle
Clients with large billing departments usually take longer to pay than a mom and pop shop. Knowing each client’s billing cycle is important as well. When you know a client’s billing cycle, you’ll have an idea of when a payment due is considered late from your client’s standpoint. And addressing late payments promptly is important. We’ll talk more about that later.
If you deal directly with the public expect payment within a few weeks if invoices and payments are sent by mail.
What Should Be On Your Invoice?
Having the right information on your invoices will encourage clients to pay them on time and in line with the agreed upon terms. Here are some tips as to what information you should include on every invoice.
All Contact Information For The Client
All invoices should contain all relevant contact information for your client:
- Company name
- Company address
- Billing department phone number
- Billing department email
- Representative in the billing department (i.e. Attn: Joe Smith)
The goal is to make it very clear who is responsible for the charges and to ensure the invoice is delivered to the proper department and contact.
An Invoice Number
It’s vitally important to include sequential invoice numbers on every single invoice you print. Why? So there’s no doubt whatsoever of the services provided or products delivered.
This is especially true in the cases where you’re delivering the same products or services to a company on a regular basis. For example, company billing departments need to know whether the invoice they’re receiving for their last order of widgets is for December’s widget order or November’s widget order.
If you don’t have sequential invoice numbers on each invoice, it will be much easier for a customer to argue that the bill you’re sending has already been paid.
The Due Date
Which brings us to the next important invoice inclusion: the bill’s due date. All invoices should include a clear and concise due date.
Most professional time tracking programs automatically include a due date that says “Due Upon Receipt”. And you can change that due date to specify a certain date or to say “Within 30 days of receipt” or whatever works for your business.
Just be sure that the client has a clear idea from the invoice as to when the payment is due.
Terms And Accepted Payment Methods
Another bit of information businesses you may want to include on invoices are the terms and accepted methods of payment. As an example, an invoice might outline that your client can pay by cash, check, or PayPal.
Or, it might include terms that say payment in full is due within 60 days. Similarly, some company invoicing allows for six-month credit payments on larger purchases. Whatever the terms your business deems acceptable is fine. Just be sure they’re outlined in a way the client can clearly understand.
Late Fees And When They’ll Be Applied
And last but not least, it’s always good practice to include any late payment charges and when they’ll be applied.
For instance, your invoice might have a line near the bottom that says “Payments not received by the due date are subject to a 10% late fee.”
The late fee terms should be placed close to the due date or include the due date. That way you can be certain clients are clear about the timeline in which their bill should be paid.
Adding a late fee amount and “due by” date is another way to ensure clients are encouraged to pay bills on time.
Here are some additional tips for invoicing success.
More Tips For Invoicing Success
Now that you know some tried-and-true tips on how to invoice, and what should be included on your invoices, let’s go over some other important tips for invoicing success.
To recap, it’s important that your company’s invoices are clear on facts such as:
- What services or products the invoice is for
- How much is due
- When the bill is due
- What forms of payment are accepted
Second, remember to know where to send the invoice and who the contacts in the billing department are. An invoice that’s sent to the wrong department or person could bounce from desk to desk for a few weeks before it finally gets to the right person.
And that could result in a delay in payment for you.
Another tip some companies use to keep clients on top of invoices is to offer discounts for early or on-time pay. For instance, you could offer a ten percent discount for bills paid the day of service or within 7 days of service.
People tend to like saving money and will often gladly pay early or on time if it means they get a discount.
Offer Multiple Payment Options
Another smart idea is to offer multiple payment options for clients. The types of payments your company accepts should work to give clients reasonable choices.
For instance, you could choose to accept payment by check, PayPal, or payments by credit card. Or you could offer a direct debit from their checking account. Giving multiple payment options leaves clients with little reason to pay you in a timely manner.
Related Article: How To Enter Credit Card Payments On Quickbooks Online
Consider Including Your Company’s Logo
Having your company logo on your invoices isn’t a necessity if you’ve got all of your company contact information included. However, there are two benefits to including your company logo on all invoices:
- Adding a logo gives invoices an extra touch of professionalism
- An invoice with a logo stands out from the crowd
Yes, adding a logo to invoices will help your company appear more professional. In addition, the added artwork and colors will help your invoice give a little shout-out above invoices that don’t include colorful logos.
Use Friendly Language
Using friendly language on your invoices is important as well. Include phrases such as “Thank you for your business” and “Thank you for paying promptly”. Using courteous language when requesting payment encourages clients to pay on time.
Related Article: The Importance Of A Good Customer Relationship Management Process
Keep On Top Of Late Invoices
Lastly, it’s important to keep on top of invoices that are past due. If you have a client that hasn’t paid on time, give them a friendly call. Or send them a friendly email reminder.
Ask if you can do anything to help and when you can expect payment. Give the client the benefit of the doubt. Maybe they haven’t received the invoice or it slipped their mind.
When you call, ask if they’ve received the invoice and gently remind them that it was due last month. Treat them as a friend, and offer to help them get the payment to you, even if that means picking up a check from their office.
Oftentimes clients are late paying invoices simply because they’ve got so many other tasks vying for their attention. If that’s the case, they’ll appreciate the courtesy call.
If they are struggling financially offer a payment arrangement or even a discount for payment over the phone. Getting something now is better than nothing.
Invoicing correctly is an important factor in your company’s success. After all, it’s those paid invoices that keep your company in business.
Knowing how to invoice properly often makes the difference between invoices that are paid on time and those that aren’t paid at all.