Preparing invoices is a task you might perform religiously as an SME. After all, if you want cash for your hard work it needs to be done – and smoothly, at that.
Cashflow always looks healthier when invoicing is done on time. Invoices need to look professional, be sent promptly and followed up on regularly.
The worst thing that can happen is you’re left with a load of invoices that are unpaid. They get forgotten about and you end up in the red – and no one wants that.
Start as you mean to go on – with good habits. A good invoicing system and a smooth billing process helps reduce the need to maintain records of late payments too.
If you haven’t already got accounting software, we highly recommend it for sending invoices quickly. Having detailed customer invoices also helps you avoid disputes with clients about what they’re paying for and when. As tax time rolls around, invoices and payment records will help you quickly round up income data for your accountan
Make sure your customers know ahead of time when an invoice will be sent. Clearly spell out the charges for late payments in your initial contract. Your business invoice should match your original estimate and contract. If the total exceeds an agreed amount, explain this to your client prior to sending the invoice. No one likes nasty surprises.
Make the payment dates clear
The invoice date should be very obvious when your invoice is opened up. Make sure that dates for completion of work or delivery are part of invoice item descriptions.
Don’t be scared to send payment reminders
Many SMEs would wait for weeks rather than risk ‘bugging’ a good client for payment. But at the end of the day, sometimes invoices get lost or can end up in email spam. Once you send the invoice track the days and follow up just before they reach their payment terms, eg a week, 14 days, or whatever is agreed.
Clear payment term with a deadline is essential because it gives you a basis for follow-up in case of non-payment. When the due date has arrived and no payment received, resend your invoice and add a note that it is past due.
Make sure your invoice design provides clarity
Make sure your invoice is clear so there is no room for misunderstanding.
Ensure your branding is prominent so it is instantly recognisable as your company sending its bill. Listing itemised products or services, fees, expenses, costs and relevant dates all help reduce disagreements and therefore ensure you get paid what you deserve.
What to include on an invoice
Every invoice should include:
Invoice number – for you and the client to track what has been paid
Business contact details
Business bank details
Invoice total due
Preferred payment method