In this quick article, we bring you 9 invoicing tips for small businesses.
Bookkeeping is perhaps one of the most tedious aspects of the business. Nevertheless, tracking your transactions is mandatory for the company.
Creating and sending out invoices are part of the process. It helps the auditor keep an eye out on the cash flow and have proper receipts to back it up with.
Thanks to technology, we have advance accounting apps for accurate calculations.
Yet, is it always better to manually confirm the transactions before approving them.
Here are some effective invoicing practices I recommend for small-scale business holdings.
Always include the date of issue
For proper invoicing practices, you must be aware of the terms of the contract before issuing an invoice.
These documents are legally binding, i.e. you can sue an issuer who refuses to acknowledge it.
The date of the issue helps the accountant keep track of the transaction. The company has written proof of the payment request being sent to the client.
It is an elementary and standard practice that most business holdings follow. Mention the issue date manually when you create the invoice on Microsoft Word.
Otherwise, there are several invoice generation platforms with readymade invoice templates.
These pre-set formats have spaces allocated for the due date, client name, purchase details, and more.
Address the invoice to a person, not the company
While you send the invoice to the company, it is advisable to address it to a person and not the organization.
This ensures that the invoice reaches the right person. For instance, in any enterprise, the accountant or the finance department handles all the payments.
Addressing the invoice to the accountant is quicker and hassle-free.
Adding the name and credentials of the person in charge also keeps the document confidential.
The person can then approve the purchase and act upon clearing the payment as they deem fit.
Invoicing the wrong recipient will mean you’ll lose out on receiving payments.
Include the referral or invoice number
Each invoice comes with its unique referral number. It is the primary identification mark that helps enterprises track the money exchange.
Audit officers usually refer to the invoice number and then work the way up. It is a relatively easier process as this number is concrete evidence of the transaction.
Invoice numbers also prevent any foul play from either of the parties. You can easily chart the path to a client or the issuer by merely matching the referral number against the receipt.
Don’t replicate this number elsewhere. You can hence use this as proof that the payment was complete.
Offer multiple payment options
Not all your clients have sufficient cash in hand to clear the payment. Some might want to transfer the amount to your bank account.
Others may wish to pay via their debit or credit cards. A few companies also prefer online payments through PayPal and other such apps.
These payment gateways are safe, encrypted, and protected from hackers.
All you need to do is register your bank account, complete the KYC details, and add a mobile number.
It is a quick, convenient way to transfer cash, especially when it’s a significant amount. Adding multiple payment alternatives also expands your reach on a global scale.
Add a description to each of the charges
Adding a short description of the payments helps when you are writing the year-end report. Business students often need this information to prepare financial papers and projects.
The transaction details are also necessary for market research and revenue calculation. Mention a special section stating the purpose and items of purchase.
Also, specify the exact charge per unit and how many you’ve ordered. It keeps the entire transaction clean and crystal clear for future reference.
Be very concise with this section; add only details that directly affect the exchange.
Send the invoice ASAP
The primary purpose of sending the invoice is to remind the vendor to complete the payment ASAP.
For this, you need to send the bill well in advance, giving the other party ample time to verify the details and pay accordingly.
The sooner you send the invoice, the faster your payment clears. Clear all debts before the end of the financial year to avoid any glitches in the company accounts.
At the end of the year, the audit officer must have all the necessary bills and their corresponding payment details.
Always ask for follow-up
This is an obvious point, but kind of an important one for small-scale business holdings. Your job doesn’t end with sending an invoice to the vendor.
You must also send regular reminders to notify them of the due date. Usually, the client gets a grace period to clear the payment.
Failure to pay the amount within the stipulated time might lead to an extra charge. Explicitly state these terms in the invoice.
From the due date to the late fee calculations and legal consequences- everything must be crystal clear. Ensure that the follow-up email or notice is well-worded and professional.
Keep the invoice clear and concise
Making money online is easy, monitoring the cash flow takes effort. Invoices are particular documents that contain both numeric and description information.
Your focus must be on stating these details as clearly and effectively as possible.
Mention details about the vendor, the items of purchase, and the cost per unit. If there are other customizations in the order, add those as well.
Include all additional charges, taxes, and profit margins as well. A company can’t keep track of these expenses unless recorded elsewhere.
Invoice and billing also help with inventory management. You can compare the receipts to check up on the stocks.
Always add a thank-you note
One of the best invoicing tips you’ll ever receive is adding a thank-you note.
Your business reputation depends on how you treat your clients. After receiving the payment, don’t forget to send a letter of acknowledgment and gratitude.
A thank-you note is a warm gesture that makes the client feel validated. It is a prevalent practice among business holdings to send these notes.
It strengthens B2B relations, solidifies brand loyalty, and ensures long-term revenue. Clients are more likely to purchase things from your company if you treat them right.
The corporate sector is professional, and a little politeness can go a long way for your brand.
So, what did you think of these invoicing tips? Let’s ave your comments in the box provided below.
Author Bio
Mary Jones is the co-founder & editor-in-chief at TopMyGrades, which focuses on Content Marketing Strategy for clients from the Education industry in the US, Canada & UK. Mary has conducted a series of webinars for AssignmentEssayHelp on assignment help. She has extensive content editing experience and has worked with MSNBC, NewsCred & Scripted. She has also authored blogs on Lifehack.org, Wn.com, Medium.com, Minds.com and many more digital publications.