Sending invoices and getting paid on time is probably the most important thing for your business. Depending on your business, you may be sending a few invoices per month, or a few hundred on a day.
Sending invoices and getting paid on time is probably the most important thing for your business. Depending on your business, you may be sending a few invoices per month, or a few hundred on a day. In either case, it is important to:
- Send the right invoice
- Send it on time
- Follow up to get paid on time
Before Sending Invoices
There are some best practices to follow before even sending the invoice to your customer.
- Make sure the customer knows about the invoice frequency, so they are not surprised when they receive it.
- Clearly discuss payment terms with your customers. 'Payment terms' is generally the duration within which the payment is expected, and is generally depicted as Net 30, Net 60 etc. It may also mean the mode of payment, or both duration and mode.
Creating a Professional Invoice
An invoice speaks volumes about your business. If you are interested in professional and aesthetically pleasing invoice templates, head over to Invoicing for Small Businesses (and FREE sample templates).
Functionally, what you must include on the invoice are as follows:
- Invoice Number
- Your company details
- Your customer's details
- The list of goods and services being provided with quantity and price
- Any taxes to be collected
- Specify any discounts
- Any additional charges like Freight
- Total Amount Payable
Check out this amazing infographic on the 9 Traits of an Outstanding Invoice to create your awesome invoice. Of course, it is not sufficient to create an invoice, you have to send it too! Which brings us the next topic.
When is the Best Time to Send the Invoice
An invoice is a promise between two parties that an amount will be paid. However, ill timed invoices can create a lot of problem for both parties. For e.g., if an invoice is for completion of certain work, then it would be prudent to send invoice upon completion of the said work. This is where the best practices we discussed in the first section come in handy.
Some best practices to follow for sending timely invoices are as follows:
- If you are in a business where cash flow is tight, try to send invoices every week instead of at the end of the month. Invoices lead to payment which leads to actual cash flow. Know your cash situation and use frequent invoicing to keep on top of it. Negotiate where possible to get shorter payment terms. Here is a useful infographic on 10 ways to improve your cash flow.
- If you are working with sales orders, specify order completion dates and invoice dates on the order itself. Then make sure you send the invoices as per the specified date. You can use a simple invoicing or accounting software to automate this for you.
- Setup a weekly calendar reminder to review invoices that need to be send. You can use Google Calendar or Notion or any similar application.
Now that you have a great looking invoice and you are ready to send it, let us look at some best practices to follow when sending the invoice.
6 Best Practices for Sending Your Invoices
- Send a non-editable copy of the invoice. This will ensure invoice is not tampered with. Use PDF. You can create a PDF online easily from your source document.
- Send your invoice via multiple channels. Send it via email, share it via WhatsApp, print and post the invoice to the physical address if necessary.
- Make sure you let your customer know you have send an invoice. Often people miss out on emails and you'd hate to miss out on that crucial payment because the invoice mail went to the wrong folder.
- Always quote the Order No, if applicable, and your Company Name when sending invoices. This makes it easier for the accounts department to relate it to their reference system. An email with subject "Invoice no. — against Order No. — from <company name>" gives all the necessary information without a need to open the email.
- Double check, triple check whom the invoice is being sent to. There is nothing more frustrating than sending the invoice to a wrong recipient and then following up with the poor soul who never got it.
- Include option to pay online in your invoice. Our research shows that online payments are processed 3 times as faster as offline payments.
Of course, sending invoices is not the end. You still have to get paid!
Follow Up for Overdue Payments
Sometimes invoice payment get delayed. In these situations, it is important to follow up with your customers and remind them of the payment commitment.
- Send a friendly and polite reminder at least 3 days before the invoice due date, and on the due date.
- It is best to follow up with a polite email or call first, or both
- Setup a calendar reminder to review all invoices pending payment on a weekly basis
- Use an online invoicing or accounting system that can automate the follow ups for for. Just remember to update payment details once you receive the money, else you risk an upset customer.
Sending invoices on time is key to getting paid. Key points to take away are as follows:
- Set right expectations with your customers
- Use a professional invoice template with clear details of goods, services and amounts payable
- Do not procrastinate when it comes to sending invoices
- Follow up regularly for overdue invoices
- Record payments against invoices when received
Do check out the following articles for more information on invoicing