Invoicing is an important part of every business as it leads to receiving money due and so can lead to your businesses success and sustained operations. Some businesses still don’t have proper invoicing procedures in place in spite of this. They are still making the following common invoicing mistakes.
Your business should always invoice on the day of a transaction. Failing to invoice on the day of a transaction can lead to you forgetting to invoice a customer. If you delay an invoice it means that you’re extending the time it will take for a customer to pay you. This affects your cash flow. By ensuring your bank details are correct and that the invoice was sent to the relevant accounts section of the invoiced company, you can facilitate more prompt payment.
2. No due date
A common mistake is not adding a payment due date when invoicing. By adding a due date in a calendar date format can often put pressure on customers to pay you in a timely manner. If it is feasible for your business you could offer a small discount on payments if they pay by an earlier date.
3. Not Itemizing
Instead of sending an invoice to a customer with just the amount they owe, you should break down what they are paying for. You can break it down into broad terms or be specific. The point of this is to show your customer exactly what they are required to pay for. If there are multiple items on the invoice then you should break down each item with their price and then calculate the total at the end with the taxes where applicable.
Not saving or backing up your invoices is another common mistake made when invoicing. It could happen that your computer crashes or there’s a fire and your physical invoices are destroyed. In this scenario you will regret not backing up your invoices. Failing to back up files can reduce your ability to invoice customers and keep track of debtors.
Often businesses are unsure about what is legally required on invoices which can lead to accidental illegal conduct. Once the requirements are established your business should create professional invoices that include your logo, information and website.
Every business should educate themselves on the legal requirements for invoices. Our five part video training series, Account-Ability, makes it easy to understand the format of invoices along with many other basic accounting topics.