Avoid these 7 billing mistakes and get paid faster
Invoicing: it’s a headache, isn’t it? At the end of a long day, or a long week, having to make that extra effort to call-in the money you’ve already earned just seems like an unnecessary burden. Worse, there’s so much that can go wrong, particularly when you’re tired and make an error. You can be certain that your debtors will exploit any opportunity not to pay you or to delay their payments. More than 60% of invoices are settled beyond the 30-day payment period.
Here are seven of the deadliest invoicing sins to watch out for:
1. Not invoicing promptly
Every day you delay is a day you don’t get paid. Be ready to invoice as soon as the job is done or the products are delivered.
2. Unclear payment terms
Ensure you set clear payment terms that are prominently displayed on your invoice. State that in the event of a default, if you have to call in a collection agency, all collection costs get added to the debt. This will give customers a stronger incentive to pay on time.
3. Incorrect information
Putting the wrong figure on an invoice is going to delay your payment. If too high, the customer won’t pay and you’ll have to go through the whole process again. If it’s too low: good luck chasing them for the balance. And if you’ve put the wrong account details on there it could take weeks to sort out the error with your bank.
4. Missing data
If you forgot to put your bank details or address on at all, how is your customer going to pay you? Same applies to if you forgot to bill for an additional product or service. You can send an updated, correct invoice, but you’ll probably have to start over with the payment terms.
5. Unprofessional look
An unprofessional invoice is an invoice that’s easy to ignore. Always avoid sending a handwritten invoice that your customer may struggle to read. An invoice that looks unprofessional suggests you don’t have a team of smart lawyers who are going to leap right onto late-payers or non-payers.
6. Making it hard to pay
Offering your customers only limited ways to pay makes it harder for them. Over 50% of all bill payments are now being made electronically. Likewise, consider offering a flexible payment schedule. Split payments up if requested: it’s better to be paid in instalments than to wait much longer for a final sum if a customer is having a cash crunch of their own.
7. Failing to chase
You need to keep track of what you’ve sent to whom and when, the date it’s due, and what you’ve received. Before the due date you should send a payment reminder, and issue a final demand the moment they go over.
Fortunately there’s a very easy way to fix all of the above, and that’s by automating your invoicing using accounting software. It can take on the heavy load for you: automatically sending out invoices once work is done, re-sending at 15 days, and sending again on the due date. It can also alert you of any delays. Automation can speed up invoice processing time from 20.8 days to 3.8 days, according to Aberdeen Group. It’s estimated that automation can save you an average $16 per invoice compared to manual processing. You’ll also find that small business accounting software offers professional, customised templates, and by using these, you can ensure that the invoice you send is clear, correct and shows you mean business. And as an added bonus: accounting software requires less paperwork! Instead of having filing cabinets stuffed with copies of correspondence, it can file away digital versions of everything neatly for you, making it easy to retrieve with a couple of clicks.
Be sure to invest regular time into doing your invoicing. Invoicing can certainly be tedious, but as you know it has to done, so try not to fall into the trap of making any of the above invoicing mistakes. It’s your business and what you do now will affect it’s progress and growth for the future.
If you’d like more of a detailed insight into some of the manageable, cost-effective steps you can take to resolve key problems when it comes to accounting and financial management for your business, download our free ebook below.