Crafting an Effective Business Invoice—The Key Elements

A business invoice is one of the most crucial documents that an enterprise creates, as it directly affects when and on what terms they receive payment from their clients. It also assumes a huge role in business for reasons such as record keeping, business analytics, easy tax filing, and legal protection.

An effective invoice is especially necessary for a small business sending out their first few ones, as it shows the client how professional they are (or are not). Therefore, a small business invoice has to encompass all the elements discussed below.

What is a business invoice?

A business invoice, which is also called a bill or a tab, is a document issued by the seller of a product or service, letting the customer know that payment is due.

         Also Read: How to Choose a Small Business Invoicing Solution: The Complete Guide

What should an invoice look like?

An efficient small business invoice has several features that differentiate it from the ones that get lost in the client’s mail.

  • The word ‘invoice’ and the company’s logo: For easy identification, these two elements are to be prominently displayed on the invoice.
  • Invoice number: Every invoice you send must have a unique ‘invoice number’, ‘reference number’, or ‘purchase order number’ to make it stand out from your other invoices.
  • Date of rendering the service: Adding this element saves time during cataloging.
  • Date of sending the invoice: Emphasizing this detail goes a long way in ensuring on-time payments.
  • Name and contact details of the seller: The client has to be provided with these details, so they can reach you if they need any clarifications.
  • Name and contact details of the customer: Including these details to the invoice is crucial, as they provide it with the necessary legality.
  • Terms and conditions section: Pay extra attention to this section. This part has to include the company’s terms and conditions for the transaction, such as the due date and the penalties for non-compliance. Also, worth noting is the fact that the terms and conditions need to be easily understandable.
  • A brief description of the service provided: Adding a line or two about the product will go a long way in clearing ambiguity about the bill.
  • Cost per unit of product or service rendered: A lot of confusion can be avoided by adding this information to the invoice. This allows the customer to easily determine that the billing amount is accurate.
  • Rate of the tax imposed: Stating this separately provides the client with a clear idea of how the billing amount was arrived at.
  • Total amount due: Another key to a good invoice is the ‘total amount due’ section. This gives the client a way to check if the rates add up and if it coincides with their calculations. Also, another important element to be added in the invoice is the currency in which the amount is mentioned.
  • A personal touch: This is the step that separates a professional business invoice from an amateur one. Take the time to add a personalized note, such as a line thanking the client for the business. It goes a long way in showing the client that you appreciate them.

Hacks to make your life easier

Getting an invoicing software online to manage small business billing needs has been recognized by many as the prudent option. Invoicing software is objectively more convenient and saves money and time. Generating an invoice has also become free with the emergence of market players such as CloudBooks, whose small business invoice template can be found here. So go ahead and send your invoice with confidence—successful and timely payment is one efficient invoice away.

How to Recession-Proof Your Business

Everyone is saying a recession is approaching, with increasing pandemics and social disruption, it definitely is about to hit the global economy. But that doesn’t mean you have to shut shop. There are ways to protect your business in the lows of economic fallout.

A recession doesn’t mean all SMEs go bankrupt. In fact, according to federal data in the US, only 170,000 small businesses out of almost seven million shut shop during the 2008 recession. Although the rest weren’t exactly flourishing, they managed to survive for another ten years. While some of the businesses actually made huge sums of profit others managed to get a better understanding of what to do during a recession. But before we dive into all that, we must understand what an economic recession is. Well, an economic recession is simply defined as two continuous financial quarters of negative economic growth followed by a stock market crash and widespread unemployment, and further followed by a crunch in consumer spending, and bank defaults. And the one that worries SMEs: an increase in bankruptcies. But it is not a norm, and there are ways to withstand another Great Recession.

Here are a few measures that will help you tide over difficult times.

Financial expense tracking and analysis
If you don’t have an expense tracking and financial strategy already in place, its time you get one. The first thing that stops during a recession is your cash flow. If you don’t have an expense tracking system that automatically sums up your expenses on a daily basis, there is a high chance you will miss out on reading the red flags early on. A recession is a gradual and then explosive economic shift. And if you only look at your budget during the tax season, you wouldn’t know how to make good cuts when a financial crisis comes knocking your door. This will also improve your spending habit and make sure you are not wasting money.

Good employees make a great business
The people making your sales on a daily basis are your biggest asset. They are working towards your success, and its best to not ignore them. These very people can make sure your business survives no matter what because they have a vested interest. Hence, you should make sure they are well trained and really a part of your team. The first thing employers start doing when a recession hits is fire employees who don’t contribute, that is silly because you hired such people in the first place. Therefore, you need to have a talented lot as your team, not average people with a degree, but talented and motivated people. The point is, your employees make your business, you should take care of them, and have a recession salary cut agreement with them, so you don’t lose the most valuable asset. And train them effectively so they can sail through the recession with you.

A solid marketing strategy
The most underrated aspect of a good business is the friendships you create. If you have a solid relationship with your client, they are likely to not drop you when times are tough. And the best way to build a relationship is through a good marketing strategy. Get to know your clients, and make them understand your ethics and values as a business through marketing channels. This may mean nothing when you have loads of clients but when your clients are making budget cuts, this will play a very big role in determining what they hold back and what they let go. It is also, therefore, important that you are flexible with payments. Even if a client is willing to retain your service during a recession, they might not be able to pay you upfront. You can set up installment system for the said clients.

                       Also Read: Recession-Busting Tips for Small Businesses

Concluding thoughts
It is almost impossible to make a business 100% recession-proof, but by adopting these measures, you can ensure your business’ survival during tough times.

Simple Ways To Optimize Your Billing Process

Atradius, a prominent financial institution operating in the insurance sector, estimates that 39% of all invoices in the USA are paid late, and that the companies are asked for an extension in the deadline for the invoice payments 52% percent of the time. Invoices area crucial aspect of business operations, and getting late payments for the services rendered or the products you sold canfrustrate you greatly.

For a small business, the billing process can be quite complicated and time-consuming. Despite the emergence of automated software that is constantly figuring out how to reduce delays and errors in the billing procedure, occasionally an issue may crop up, causing trust issues between the business owner and their client.

The process of improving the billing process flow is never-ending, but it can yield results that can enhance the output you get from your billing software. Here are a few suggestions youcan follow to optimize your billing process.

  • Automate your billing process
    Automating your billing processes can go a long way in ensuring the smooth operation of your business. Make sure you get the billing software for business that can help you create custom recurring invoices, track their status, keepsensitive client data securely, and schedule and send reminders for payment as well. This will not just save you a lot of time, money, and effort, but also reduce your stress levels.
  • Provide complete information
    Providing relevant and complete information to your customers is key for your process for billing to go smoothly. Many business owners tend to make the mistake of focusing too much on their invoice designs rather than ensuring that it has crucial information, such as a description of the product/ service, the order and invoice number, total amount, the last date for payment, acceptable modes of payment, the terms of payment, and contact details as well. A thankyou note to the customers, which shows you care, can also be a welcome addition to the invoice.
  • Establish terms
    To increase your chances of getting paid on time, make sure you establish the payment terms and policies with the client beforehand. Tell the customer what you expect, ensure that they are comfortable with it, and also let them know what the penalties are for violating the terms.Theywill appreciate the effort and thought that has gone into the process. Establishing these ground rules will foster an atmosphere of trust between the stakeholders.
  • Make your invoice impressive
    Sending out an easy-on-the-eye invoice is important as the client can gauge your level of commitment just by looking at the invoice. Always ensure to personalize the invoice as the customers feel special when you do that. Whileyou need to ensure that the invoice is well-designed and attractive, it should not take precedence over simplicity.
  • Monitor the payments
    It is quite prudent to keep track of what stage of the billing process you are at. Monitoring the payments is crucial as it allows you to ensure that the invoices are error-free and reaching on time while also providing you with constant feedback on the billing software you use.
  • Get on the cloud
    This will allow you the flexibility and accessibility that is necessary for today’s competitive business environment. Cloud-based systems not only speed up the process and eliminate irrelevant data from your system, but it will also allow you the luxury of monitoring the data from wherever you want.

Closing thoughts
Success in business often boils down to how smooth the operations are, and getting your invoicing right is a key part of that process. It doesn’t have to be a painful and confusing journey as long as you have the right tools – clear payment policy and an automated billing system – that keeps your billing process running like clockwork.