From individuals operating as freelancers to multinational corporations, there’s no denying that invoicing is one of the most essential elements of running a successful business. After all, invoices lead to payments, and payments lead to profits.
When your invoices are working for your business, you’ll be able to maintain a positive cash flow, make projections for your future and provide a professional experience for your customers. When your invoices aren’t working well, it’s impossible to run a business properly.
If you’re having issues with invoicing or late payments, the fault may be on your side. However, there are several tips you can use to ensure that your invoices are not a stumbling block on the road to success.
Key Tips For Checking Business Invoices
Any business invoice that you send out to a client needs to be professional. It should be clearly laid out, error-free, and easy to read. You want your client to immediately see that the invoice comes from you, what they’re paying for, and how to pay you.
So, how do you ensure all of this?
By asking yourself these three questions before you hit send:
1. Do The Payment Terms and Details Match What You Agreed to with The Client?
Payment terms are all about when you expect payment. Payment details are how you expect to get paid. These should never come as a surprise to your client when they receive your invoice.
If you’ve sent your client a quote before the work began or the product was shipped, then that quote should clearly state your payment terms and details. You should then have the exact same information on your invoice.
If you’ve provided a client with a special payment agreement, you need to ensure that this information reflects on your invoice and that you haven’t included your standard information. You could cause a major upset if you don’t make that change as you’ll overcharge.
While you’re at it, make sure that the payment details are correct. You need to have the right banking details or the correct links to the payment platforms you use. If you’ve changed any of these details, be sure to highlight them for the client. Otherwise, they may use old payment details if they’re regular customers.
2. Do The Line Items and Descriptions Make Sense?
Here, we’re looking at what the customer is paying for. A line item is the breakdown of services, parts, or products that you’ve provided to your client. This can include a code for each item, a title, and a description to provide more detail.
It’s crucially important that this information makes sense to anyone reading the invoice. You don’t want your client to receive an invoice that has details that are all in technical terms and make no sense to the layperson. They need to know what they’re getting charged for so that they can confirm on their side that they received everything on the invoice.
If your invoicing system has codes and titles for line items that you need to set up, make sure you do this carefully. You may need to use specific titles for line items to match up to your inventory in your business. However, you should then ensure that there is a decent description along with that title so that your client can easily understand what it is.
If you’re inputting each item manually into your invoices, be sure to think about how you communicated with the client in the quoting or startup process. Be sure to use the same terminology for line items as you used in these conversations. This is especially important if you’ve sent them a formal quote—the line items should match.
3. Does Your Invoice Contain All The Vital Information?
All invoices have specific information that’s required. It doesn’t matter what service or product you’re providing, or how big or small your business is, you should always include:
- Your business name
- Your business contact details
- The client’s business or personal name
- The client’s contact details
- Payment details and terms
- An invoice tracking code
Right at the top, you should have your business name, or your name, if you’re a freelancer with no company name. After this, you should put your contact information, such as your telephone number and email address. You also need to include your physical address, and can include your website and social media links. However, these don’t need to be at the top of the invoice.
Next, at the top, you need to add the details for your client. Put in their business name and the name of the person responsible for the account. If you’re dealing with an individual and not a company, just include their name. After that, put in their contact details—telephone number, email address and physical address.
If you and your customer have VAT numbers, be sure to include both of those on the invoice.
Then, you need to include the payment information and terms. You can do this at the bottom of the invoice, however just make sure that the information is clear and easy to read.Your payment terms should appear on every invoice, even if you’re billing clients regularly as they add legal weight to your agreement.
Finally, you need a tracking code or a unique identifier for your invoice. This makes it much easier to manage your documents and keep an eye on which invoices you’ve sent out, which are due for payment, and which ones are late. You’ll usually add this near the top of the invoice.
Your system for codes can be strictly numerical, starting at one for the first invoice you send out and keep to count up. Another option is to go with an alpha-numerical system. Include letters for the client’s name and numbers to differentiate between invoices.
Always Keep Your Invoices Professional
An invoice is a critically important part of your communication with your customers. When you have a professional, concise, detailed invoice, you’re telling your clients that you care about your business and the experience they have with it.
Whether you’re keeping it strictly digital or you’re using a printable email template, it’s vital that you get the information correct. It could be the difference between retaining a client in the long term and losing one due to unprofessional accounting practises.