There are many aspects of running a business that are pleasant and enjoyable. Unfortunately, there are other tasks that business owners don’t look forward to at all. Invoicing is one of the responsibilities that most entrepreneurs don’t enjoy very much as they try to grow their business.
Although there are plenty of things that you would rather be doing than sending invoices, invoicing is an essential part of running a business. If you don’t invoice your customers correctly, then you will fail to generate revenue. This will obviously create serious cash flow problems. Since 82% of all business failures are due to cash flow issues, you can’t afford to make that mistake.
You can make things easier with an invoice generator, but you have to also understand the general best practices of invoicing. You need to be aware of the different invoicing mistakes that businesses make. Some of the most common are listed below.
Not sending invoices out on time
Some businesses tell their customers that they will send an invoice once a month. However, they might go two or three months before sending them out. In some cases, they wait an unreasonably long period of time. One individual looking for legal advice online once said that they wanted to send an invoice for work that they did two years earlier, but weren’t sure if it was too late.
You can’t make the mistake of waiting too long to send invoices out. Your customers might lose track of the work that you did and think that you are billing them too much. You also have to consider the cash flow situation of your customers. They might forget about the money that they owe and be upset if you try to send them a huge bill for multiple months of work at once.
It is important to stick to the invoicing schedule that you agreed on with your customers. You will avoid encountering cash flow situations, angry customers or running into misunderstandings where they think you are billing for work that you didn’t complete. This is a reality that you have to understand when running a business.
Neglecting to use brand materials for your invoices
You will want to include your company name, logo, address and other essential aspects of your brand on your invoices. This is important, because everything that you do reflects on the image of your business. A professional invoice is more likely to help reinforce the positive impression customers have about your company.
Your customers will also be less likely to get confused if you include brand elements in your invoice. They will remember the work that you did for them and be less likely to dispute the invoice. They might be more likely to get confused and refuse to make a payment if you bill them under your personal name when they were used to referring to your company brand name during correspondences.
Not making it easy for customers to make payment
Unfortunately, collecting payment from customers is not as easy as it would seem. They aren’t necessarily going to pay your invoice right away just because you send it out, even if you have a clear deadline listed.
Some of the reasons that customers don’t pay invoices are outside your control. However, there are ways that you can structure your invoice and collections methods to maximize the likelihood that invoices will be paid.
One of the important things that you should do is make it as easy as possible for customers to make payments. You should offer any payment method that is reasonably convenient to customers, unless there is a good reason to preclude it as an option. If you are sending digital invoices, then you will want to have automated processes that allow customers to send a payment electronically.
Take some time to think about the different payment options that you could try to provide. Here are some that you might want to consider:
- Direct banking transfers
- Credit cards or debit cards
You will want to set up reliable payment collection systems through any of these options if you can. The likelihood that your invoices will be paid on time will increase considerably.
Sending invoices to the wrong customers
One of the most embarrassing invoicing mistakes that you can make as a business owner is sending invoices to the wrong customers. This isn’t just an embarrassing mistake, though. It can really ruin the brand image of your company.
Imagine sending a $1,000 invoice to a customer that only purchased $100 worth of your products and services. They would probably be incredibly upset and have a hard time laughing the mistake off after you apologized and explained it was an error.
When you send invoices to the wrong customers, they are likely to see your company as unprofessional or untrustworthy. You need to keep detailed records and make sure the right customers are billed at all times. You should also list the specific products and services that you are billing for to make sure there are no misunderstandings.