Seven Common Invoicing Mistakes
Are you struggling with cash flow? Are you frustrated with slow paying clients? Typically businesses who are suffering from slow payment issues are usually making one of the following seven mistakes.
Invoice as soon as possible
Whilst all businesses send their invoices at different intervals depending on their product or service, the general rule of thumb is that you should invoice as quickly as possible. It minimises risks of making mistakes with the detail of the invoice and ensures that your payment terms are activated and start ticking immediately.
Make sure your invoice has correct detail
You should try to include as much information as possible on your invoice including quantity, hours worked and date the product/service was delivered. You should include details of your payment terms, payment due date and details of how to make a payment. Break down your description of product/service and make it crystal clear. Check also that you have charged the correct VAT rate and included you company VAT number. All the current VAT rates are set up for you in MindMyBusiness One mistake or omission on the list of details and your invoice will end up in the query pile delaying your payment further. MindMyBusiness has a template that you can customize making sure that you do not forget any of the important details and reducing your margin of error.
Send your invoice to the right person
It is useful to check who the invoice should be addressed to and check if there is a specific company entity (and corresponding company registration number) that should be included. Just because you have been corresponding with one person that does not mean that their name should be on the invoice. Mind My Business allows you to store the designated recipient and uses it when emailing invoices
Number your invoices
It sounds simple but in order to keep track of your invoices you need to number each one in a sequential manner. MindMyBusiness keeps track of each number and updates automatically the number on each invoice.
Consider shorter payment terms
Whilst traditionally 30 days has been considered acceptable for payment terms you can also consider a shorter period. Remember that many companies pay after the 30 day period and thus you may not get paid until several days or even a week after that.
Follow up on payments
There will of course always be slow payers. The most important thing you can do is keep track of who these payers are and have information on how much is outstanding and for how long it has been outstanding. Using cloud accounting software such as MindMyBusiness you can track all of your invoices. You can create a report at the touch of a button which will list your outstanding debtors. You can email them directly from within the system to remind them that the invoice is overdue and you can automate a series of messages to them to remind them on a continual basis.
Save and back-up your invoices
These are some of the businesses most important documents and you need to make sure you have copies to hand for tax purposes and in case of disputes down the line. Using a cloud accounting software like MindMyBusiness, you can automatically store all invoices issued, saving yourself the hassle of storing a very significant paper trail! As an additional precaution MindMyBusiness can send a blind copy of invoices to you.