A study on invoicing conducted by Market Invoice, later rebranded as Market Finance, has revealed that around 60 percent of invoices are paid late. Given this reality and the importance of positive cash flow for your small business, the significance of a proper invoicing system cannot be understated. Getting paid on time is not entirely up to you, but there are several aspects of an invoice that you might be neglecting. And this could contribute to the late or non-existent payments from your clients. Here are the most common mistakes that you need to avoid.
- Not having an optimized template for your invoice
Your invoice, despite being a standard document for requesting payment, requires a lot of details to be entered correctly. This is where the eye-catching templates, provided free of charge by Cloud Books, comes in handy. It is crucial to get all the details of the invoice correct as this eliminates confusion between the stakeholders and ensures on-time payment.
- Not setting clear terms of payment
It is easily the mistake with the direst of consequence. Not agreeing to clear payment terms will land you in major trouble. Make the terms as clear as possible. Avoid complicated jargon that the general public find difficult to understand. An easy to understand payment terms will help you cash flow seamlessly.
- Not having the right person to reach out to
Many small businesses make the mistake of addressing the invoice to the wrong person, leading to avoidable delays. Your person of contact is most likely someone from finance or legal team of the client’s company. You have to take the initiative to find the right person to mail your invoice to. This goes a long way in ensuring on-time payments on every occasion.
- Not setting a specific due date (and a penalty for failing to comply)
Small business owners must have a specific date on which they expect to be paid. Failing to do so can cause delays in payments for your services, leaving you to encounter issues with your business operations due to the shortfall in the revenue. Apart from reminding your client frequently (your invoicing software takes care of this), you also need to set in place penalties for delay in payments. Some small businesses also offer discounts for making payments before the due date, but they collect the full fee if the payment is made on the due date.
- Making mistakes or leaving out crucial information
This is one of the costliest mistakes you can make. Your payment could be delayed, if you leave out crucial details, such as reference number, product description, name and contact details, date of service provided, etc. Therefore, before sending the invoice, you should check it thoroughly for spelling mistakes and ensure it is sent to the right person.
- Forgetting to back up the original file
A surprising mistake small business make with their invoices is forgetting to back up the original file. You have to make sure it doesn’t happen. Invoices need to be backed-up and stored on the cloud so that they can be easily retrieved for the purposes of auditing or making changes on it.
A robust and feature-rich invoicing solution is beneficial for a small business to operate without complications. While some invoicing mistakes are unavoidable, having a system such as the one provided by Cloud Books can mitigate the hassles and fix the errors brought about by flawed invoicing. Due to its excellent tracking abilities, timely remainders for payment, and simple ways to correct invoicing mistakes by small businesses, Cloud Books has emerged as the invoicing software of choice for many.