Every business, large or small, must invoice clients in order to ensure their payment for the services or products provided. This is an integral part of every business transaction, and it has another vital goal: maintaining proper cash flow for the business. However, invoicing is often regarded as a tedious task: it requires attention to detail, allows no room for error, and most importantly, demands strict follow-up, since it is the habit of many clients to defer payment until a later, unknown date. Nevertheless, there are several ways to make the invoicing process easier, quicker and more effective:
- Discussing payment terms ahead of time: Before going into any kind of transaction with the buyer, both seller and buyer should agree on the timeframe of payment (payment upon receipt, 30 days, 60 days, etc.). This way buyer will know when the seller expects to be paid.
- Avoiding confusion regarding the price: The amount to be paid should also be agreed on beforehand. The buyer should be made aware of the price of the product/service he is purchasing, either by the seller listing his prices on the website (and/or brick&mortar business) or by his sending the buyer a written quote. The buyer should also be made aware of any amounts that will be added to the price such as VAT, shipping costs, etc.
- Listing the accepted types of payment on the invoice: Making sure the buyer knows how he can pay helps in speeding the payment process. Therefore, the buyer should list the types of payments he accepts – credit card, check, PayPal, etc. – on the invoice, and also include any instructions or limitations pertaining to these types of payment (for example, which type of credit card is not accepted, or the name of beneficiary that should appear on the check).
- Addressing the invoice to the right person: Many invoicing mishaps are the result of addressing the invoice to the wrong person or entity. Sellers should provide the buyers in advance with the correct contact details (full name, role, email address, telephone number, etc.) to which the invoice should be sent, to avoid any delays in payment or risk the invoice getting lost.
- Invoices should be numbered: In order to keep track of payments, both for tax purpose and in case an invoice gets misplaced, it is vital to assign numbers to invoices and keep them organized accordingly. All paperwork pertaining to business transactions should be organized and easy to track down, including contracts, price quotes, receipts, etc.
- Following up on payments: To make sure buyers don’t forget to pay or try to avoid paying at all, sellers should follow up on the payment after issuing the invoice. This can done by resending the invoice with a reminder, calling the buyer or, if all else fails (the buyer avoids both emails and calls) – taking legal action. However, that is an extreme measure that should be taken after all other options have been exhausted.
- Automating the invoicing process: Today, many businesses opt for an automatic invoicing system. Such a system allows making templates for regular clients so that invoices are sent to them automatically on a recurring basis. Such a system can also send automatic reminders in the case payments haven’t been transferred. Automatic invoicing systems have many innovative features which make invoicing simple and effective.