A few days ago, I faced unwanted trouble from an online seller. As we're already getting used to online shopping, it's normal to have an invoice from the seller. What I've experienced is that my payment was cash on delivery.
I've paid the whole amount to the delivery boy. As the payment method was unclear in the invoice, the seller seemed it was an online payment and didn't get the money.
Anyway, If the invoice carried the correct and complete information, you might not deal with such trouble. From small startups to large enterprises, an invoice is a must thing. If you've failed to convey it properly, you will suffer in the long run.
What is Invoicing?
An invoice is a document issued by the seller to inform the buyers about transactions made. Invoicing is important for both the buyer and seller.
For the buyer, it is a legal document that serves as a receipt of goods or services sold to him. The invoice will provide necessary information about the transaction made with the seller which was discussed earlier.
Thus, each invoice must consist of thorough information about products or services along with their cost price.
An invoice also contains information about the seller such as contact details. It helps the buyer to look for the seller's contact information in case of any further clarification or verification.
What are the Different Types of Invoices?
There are mainly four types of invoices, based on their purpose:
- Service Invoice - It is used in the service sector for various services provided like travel, insurance, etc. If you need to issue an invoice on behalf of another company or any person then this type will be used.
- Sales Invoice - It's one kind of itemized bill that is sent with goods or services. Mainly used in case of a business where goods and services are taxed. If you buy goods, then there would not be any VAT added but if you get something service then the tax would be added.
- Proforma Invoice - It is used by a supplier to get an advance payment of goods or services that the supplier is going to supply in the future. It can be considered as a kind of offer from the seller's side.
- Blanket Order Invoice - It's mainly issued when there are multiple transactions taking place for the same supplier or same buyer. In short, one invoice covers all the purchase orders and not individual invoices for each purchase order.
How to Create a Product Invoice?
As per your need, you have to design a product invoice template with a complete description of products, pricing, and other information that is required by your company's billing department.
Ensure that there should not be any spelling mistakes, otherwise it will create a bad image for the company.
Components of Product Invoice
- Title page: This is a standard part of every invoice and it consists of your company name, contact information, and several other details to make the created template look legitimate. It's also known as letterhead.
- DateLine: It specifies the date on which you're creating an invoice. You can mention any single day or may leave it blank too if not required.
- Client Info: Here you need to specify your client's basic information like name, address, etc., along with his/her e-mail ID and phone number, etc. If possible try to add a fax number too because sometimes we receive clients' fax orders or communication rather than phone calls.
- Company Info: Here you need to mention the company's name, address, headquarter location, and other details like a website or registration number, etc., for your reference purpose.
- Details of Invoice: This part generally consists of several sub-parts with important information about order details, products description, quantity, and their prices, etc.,
- Delivery Address: Here you need to mention the date of delivery, a bill to party name (optional), and full address with zip code of the place where the order has been shipped. This section will help in having complete information about the shipment destination of an order.
- Terms & Conditions: If your company is providing any kind of special offers or discount policies etc., it's good to update such policies in this section.
- Shipment Method: It specifies the mode and time which your company uses to send products or delivery orders. For instance: courier, post, etc.,
In this article, we're providing the 25 most important invoicing tips for small businesses and entrepreneurs.
The most important invoicing tips at a glance
1. Set some payment terms and agreements
Every business must have a set of payment policies and terms to get a good acceptance from your clients. Make these terms easily understandable. If your agreements stand poor, you may have to face certain problems such as payment delay, illegal intimation, unwanted follow-up, etc.
For a better understanding and trouble-free operations, set some terms and conditions in your invoice. Also, clarify the government jurisdictions, taxes, discounts, and other important terms of sale.
2. Create a smart invoice template
Invoices are probably one of the things that create an impression and increase brand value to your customer. If your money receipt leaves an impact on your customer's mind, chances for further dealings increase more.
Provide complete company information, brand logo, customer information, product details, payment procedure, date, invoice number, contact information, and other important information. Try to make it on a single page.
3. Choose the right personnel and time to invoice
Several departments handle several jobs. The person contacted with you may not be the last person to receive your invoice. It may not reach their accounts. So, you need to know whom you need to pay. Learn this at the beginning of your job.
It would be best if you evaluate when your invoice impacts your cash flow. For example, is it before or after the product is sent to your customer? Some business policy has advanced payments while others have payment after delivery. Make your invoice as your business policy demands.
Also, maintain the holidays, festive days, working hours, etc. You should send your invoice to the office hour. If it is international dealings, try to find out their holidays and leave days. Send them within their working time zone.
4. Introduce an automatic invoice system
It’s wise to use an automatic and dedicated tool for invoice management. There’s a lot of benefits of using the software. It saves time and minimizes the hassle of doing manual work. Also, you may feel less stressed and avoid mistakes.
Applying an invoicing software like Freshbooks may ease and simplify your invoice. You may use this advanced cloud storage invoicing tool for free. It not only invoices but also provides templates, data import, export, reports, charts, and graphs.
Also, if you want to handle employees, track their working hours as well as manage the invoice, go for Apploye. You can create an unlimited clients’ database, invoice them, add taxes, discounts and perform many tasks with Apploye.
The more you’ll get from automatic invoicing software are payment tracking, multi-currency management, reminders, integrated payment, etc.
5. Keep the procedure short and simple
Remember, you are dealing directly with your target customer. Their views on your proceedings influence their minds which ensures further dealings. It will work as word of mouth too.
You should make the process as much as clear and short. For small business owners, especially startups, have confusion about the clients’ billing. Just follow some tips to keep the invoice procedure simple.
- Check and double-check the client’s information, pricing, product, and contact details.
- Apply GL (General Ledger) code for tracking the debits and credits.
- Accelerate the approval process.
- Number the invoice for further tracking.
6. Ready a support team
There are lots of issues that come with running a business. Whenever it seems a direct dealing with consumers, you may get many inquiries. Try to get over all the queries of the customers.
Your support team shows your service of quality. Engage an experienced one in the support team. Sending reminders for a missed payment, handling the negative response of clients, etc., are also responsibilities to maintain.
7. Always show positive vibes
It's always to keep a smile on your face. Keep a spring in your step. There is nothing important but to be positive and polite. You may have to face a rough or chaotic mind. Don’t lose your temper and manage him in a considerate way.
Send all the messages with affable texts. It increases the chances to get the payment faster. Don't forget to give a ‘Thanks’ to the clients. Also, you may use specific greetings like ‘Happy New Year!’ or ‘Good Morning!’.
8. Don’t overlook late payments.
It’s very common for the customers to forget to pay the money. Also, the frequency of such issues is very minimum. But don’t be afraid of such kind of trouble and hesitate to follow up.
Make sum extra charges on late payments after missing the deadlines. Let your customers know about the regulation on missed payments. Send them alerts and reminders to pay faster.
9. Give less time for late payments
It’s your right to ask for the money in time. But you should know about the suitable period of payment. You can send reminder emails or notifications when they need to pay the money after a week, 10 days, or a month.
It proves that you are demanding their bills on time and don’t give more time for late payment.
10. Keep your invoices simple
Don’t make the invoice complicated or even lengthy. Try to maintain a professional approach, without having too much information for the customers.
Add only what is necessary like company name, address, contact details, date of billing, and summary of the payment. Attaching specific details like product price list or service description shouldn't be needed for most cases.
You may need it only when you are sending an official one to obtain business data PII (Personally Identifiable Information) like SSN (Social Security Number).
11. Don’t forget the follow-up
When clients fail to give sufficient response within 24 hours after getting emails or reminders that generate automated emails at pre-set dates. The follow-up process will encourage them to respond at the earliest, which is beneficial for your business.
12. Use templates wisely
Templates are great to save time and ease of use that enable you to create the same kind of invoices every time with only a few clicks.
But don’t forget about customization as it will play a key role in strengthening your relationship with your clients.
13. Give necessary instructions on payment
You should inform the clients about methods of paying through credit cards, PayPal, or other options available for them for example wire transfer, check payments, etc.,
They may not be aware of how they can pay you directly without involving third parties like banks or Payment Gateways.
14. Make invoices easy to read
It is significant for your clients to take a quick look at your invoice. Add the necessary details which you already mentioned earlier.
It should be an objective statement that emphasizes the payment without having too much information loaded into it. You may use figures or bullet points as additional elements if required.
15. Use color scheme wisely
Color scheme plays a significant role in making your invoice eye-catching and appears attractive to customers, which will push them up to confirm receipt of services from you or purchase from you again.
But don’t make it too colorful as it slows down the process of reading text and increases chances of missing out any detail from the invoice by customers as helping fraudsters copy all your information from the invoice.
16. Keep a record of your invoices
Store all your data records in a secure place, which is easily accessible for both you and the clients as well as it comes in handy when you need to make a report based on old records.
It can be useful at times to prove your claim with the authorities or may turn into irreplaceable information during a tax audit or legal disputes with customers.
17. Do not send too many emails
Don’t keep sending emails to your customers asking them to pay faster as they may think that you are taking advantage of this situation and write it off permanently without paying their bills.
You should always give appropriate time before following up again even if they fail to respond within the first time.
18. Make your invoice as proof of work
You should send an invoice to the client along with every product or service that you sell to them even if the transaction is a small one, it may lead to future problems if they try to deny any transactions without confirming it from you.
19. Keep time limit for payment before sending reminders
Many business owners make the mistake of sending reminders too soon which irritates customers and push them backward leading to more delay than expected.
You should consider giving 2 weeks before starting the reminder process till then wait patiently and follow-up once again depending on how long it takes for getting responses from clients.
If they ignore your email also after following up many times, send them legal warnings through attorneys or collection agencies.
20. State the terms and conditions
You should keep in mind that every business has a different payment policy, which means you must provide all necessary details on your invoice like how long it takes to get paid along with any other details like discount offered etc.
This will make sure that everything is clear before finalizing the sale or work performed for the customer.
You can even mention late fees if applicable on your invoices to create awareness among clients about the consequences of not paying bills on time.
21. Use appropriate emailing services
There are several online tools available for sending invoices through emails, find one suitable for your needs and use them efficiently so that customers receive invoices via email without making any more effort than usual.
22. Use suitable communication channels
While communicating with customers, make sure you use appropriate communication channels which will help you in escalating issues faster and get faster responses from them without any delay which can cause problems to your business.
23. Make use of mobile invoicing apps
There are several mobile invoicing apps available for different devices like iOS or Android operating systems which you can download easily and keep tracking of records on the go.
Along with this keep contact information updated so that users always know how to reach out to you quickly when required using these tools.
24. Be responsive 24/7
This is one major rule of running a business that enables client satisfaction at all times by providing quick services round the clock assisting them over the phone, email, or chat, and responding to their queries in the minimum possible time.
25. Make use of free online invoicing applications for small business
There are several web-based free invoicing applications that you can find easily on the internet to keep tracking of your records and generate customer invoices with minimum effort.
You should always keep such alternatives handy when other resources are unavailable so that there is no problem while running a business smoothly day after day.
Benefits of using the Invoicing Tips for Small Business Owners
1. It will not take much time to draft a professional-looking invoice if you follow these tips which will save your time and allow focusing on other important tasks as well.
2. You can easily track all records related to invoicing using these tools or applications so that you have all the details in front of you without making any effort for saving time and effort later on.
3. Customers are happy dealing with professional business owners who understand their requirements properly, provide quick services at the right prices following up once or twice before closing a deal resulting in long-lasting relationships leading to trust among each other which is one great advantage from Invoicing Tips for Small Business Owners.
4. By sending reminders regularly before starting late payment penalties, you can increase the chances of getting payments on time and improve relationships.
5. There are several free invoicing applications which you can find easily on the internet and use them for tracking records and generating customer invoices without any problems because they not only save your time but also make things easy while running a business smoothly day after day.
6. All these tips will help you in creating better relationships with customers by understanding their needs properly and providing quick services at the right prices because such types of business owners always get more referrals from existing clients which is one big advantage of using Invoicing Tips for Small Business Owners.
7. With 24/7 availability to your clients online or offline, gets easier to maintain good relations no matter where you are and at what time.
8. Taking help from experts in this field like website designers, social media experts, etc will not only save your valuable time but also protect your business from competitors trying to spoil things for you.
9. Regular communication channels with clients allow bringing their queries into the notice immediately without making them wait because such types of business owners always get more referrals from existing customers resulting in the growth of business day by day.
10. It saves money which is invested earlier on employees who do repetitive tasks like invoicing or record keeping by using invoicing tips which can be further utilized to enhance or upgrade other parts of running a business smoothly and efficiently saving precious hours while doing so.
11. All these tips are easily available which you should follow to make things easy while running a business smoothly.
12. You can track all your records in one place without any problems while saving time and effort later on for other important tasks related to running a business smoothly.
13. Proper communication with clients or customers increases customer satisfaction leading to better relationships resulting in the growth of business day by day because they feel happy doing business with professional owners who understands their needs properly, provides quick services at the right prices following up once or twice before closing a deal which is one huge advantage using invoicing tips for small businesses.
14. All these Invoicing Tips for Small Business Owners are easily available online which you should use to save your valuable time and efforts later on so that you have all the details prepared in front of you without making any extra effort.
15. You can increase the chances of getting payments on time and improve relationships with clients by sending reminders regularly before taking late payment penalties because such types of business owners always get more referrals from existing clients or customers resulting in the growth of business day after day.
16. There are several free invoicing applications available easily online which you should use to track records and generate customer invoices without any problems because not only do they save your valuable time but also make things easy while running a business smoothly.
Sometimes we don't get concerned so much that we do for other business works. But, if you don't settle it down properly, you won't get the revenue properly.
There are lots of business organizations that have failed to apply a smart invoicing system. As a result, they can't make a profit nor get the capital back. So, Put a closer look at it and create consistency in the whole process. Good luck with your business!
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