It is essential for every business to ensure timely payments for the delivery of its product or service. As a significant step in the accounts receivable (AR) management process, streamlining invoicing goes a long way in determining the success of an organization. Having an accurate and efficient invoicing system can speed up customer payments and helps a business become more consistent in the realization of its revenue.
The following tips will help you make the invoicing process seamless.
Before sending an invoice, a business should know what work has been done, and how it was done. It is recommended to track the work on an ongoing basis via time-management platforms. Use time-tracking software for hourly billings. All data pertinent to the invoice must be entered correctly into the system.
A business needs to send an invoice immediately after the work is completed or a product or service is delivered, as prompt invoicing generally leads to prompt payments. It also reflects your professionalism. When invoices arrive late, it sends a wrong message that you are casual when it comes to the collection and it may delay the payments. Setting reminders can help you send invoices in a timely manner.
Always follow a clean and consistent format for invoices. An invoice should be simple and to-the-point, and yet effective. It should be easy to understand as most invoices are read quickly and immediately upon receipt. Key details such as payment due date and amount should be clearly legible.
A good invoice should include all pertinent information, such as:
Prepare a billing schedule and stick to it. Consistent invoicing helps businesses plan and indicate to customers when to expect an invoice, thereby enabling them to make payments on time. If possible, try to bill recurring invoices on the same day each month as it may reduce the chances of an invoice being overlooked.
It goes without saying that terms and conditions, or business policies, should be known to both buyer and seller. Else, it may lead to unnecessary confusion and disputes. An invoice should contain all the terms and policies and it should be intuitive and easy to understand for the customers. An invoice should clearly communicate business policies regarding late payments, discounts, etc.
Gaining adequate knowledge regarding clients and their business cycle always increases the chances of being paid on time. Also, freeze on details such as the preferred way of billing and mode of payment (whether online or check or lump-sum or part payments). These details can help to avoid future disputes.
Insist on sending digital invoices even if the client prefers printed copies. Send invoices by post as well as electronic mail, as this ensures delivery, and helps when customers shift their office premises. This practice is also valuable in case of legal issues as you will have dual records of communication with the client. In case of invoicing via email, always send an invoice as an attachment.
It is always appreciated when you send timely reminders about payment deadlines. This will ensure payment on time and relief to both parties. Decide what timeline works best for your business and clients.
An effective invoice should always provide details regarding multiple payment options to clients. For example, a digital invoice may include a link for making payments online. Businesses can also offer installment payments to facilitate the smooth collection of receivables.
Always include a ‘thank-you’ phrase in the invoice such as, “It was a pleasure serving you.” Also, try to connect with the accounting department, introduce yourself and inform them that you are sending an invoice for the product delivered or service rendered. Putting a face to the business may provide it with more attention and help in faster payments.
Late payments must be taken as a serious matter, as it is your right to claim the outstanding dues. Send a digital and paper mail reminder about late payments, including details such as the amount due, interest on late payment, and tracking number. This should be your first step in claiming payments before seeking legal remedies.
Develop a system for tracking invoices as it is essential for the proper updating of financial statements and tax payments. Have up-to-date details of clients, and their status of payment. An invoice numbering system can help businesses in this regard.
Install efficient invoicing software that helps you create professional invoices with all the required information. The program should permit customization with respect to themes and colors. It should allow different levels of access to multiple users and provide real-time reporting.
If your invoice has a lot of blank spaces, then use it judiciously. It can be leveraged to advertise your new product or service or communicate any update to the existing product or service. This cross-selling technique not only reminds the customer that you have more to offer but also helps in building loyalty.
Outsourcing the task of invoice data entry to a professional Finance and Accounting (F&A) outsourcing Services Company will ensure that the task is completed with accuracy and within the specified turnaround time. Outsourcing will enable the improvement of the productivity of your employees, and they can concentrate their energy and time on mission-critical objectives.
To conclude, establishing an effective and efficient invoicing process will facilitate organizations in collecting payments on time and in a standardized, planned manner. Not only will this boost revenue for the business, but it will also establish the enterprise’s reputation as a professionally-run entity.