If you are a small business owner, you may not recognize just how important the invoice is to getting paid. Here are seven small business invoicing mistakes start-up owners make and how to avoid them.
Hesitating to Send the Invoice
Forgetting to send an invoice is one extremely obvious mistake you should not be making. If you don’t send your customer an invoice, you will never get paid. Despite it being obvious, not sending an invoice is caused by one common mistake that owners make, leading to forgetting to send an invoice. That is waiting to send the invoice. Maybe for some reason, you think it’s best to wait to invoice at the end of the month, or you like to send all of your invoices out simultaneously. This method can cause endless delays in getting paid and is a mistake waiting to happen.
To avoid forgetting to invoice, you should immediately send your customer an invoice or generate one in person on the spot. This instant invoicing practice will increase your chances of getting paid.
Neglecting to Create a Contract
Small businesses and sole proprietors rush to close a deal with a new client and willingly move ahead on the venture before signing a contract. However, a handshake type of deal is a mistake you should not be making. A contract permits you to set the project’s considerations, guaranteeing that you’ll be paid irrespective of whether your client changes their mind. You can also use the contract as an opening to set the rate and payment terms.
Generally, if you can automate a task, you should do it today and in the age of technology and automation. Invoicing is no exclusion. Automating your invoicing using accounting software takes the human factor out of the situation. It makes it more probable that your invoice will be sent immediately and increases the chance of prompt payment.
Clients who regularly use your services ask for their authorization to set up an automated invoicing where they are billed repeatedly for your services. Most customers enjoy not having to think about remitting payment and will agree.
An invoice is not only a payment request, but it includes important information. All invoices should include the following information:
- The company name and phone number
- The company headquarters address
- Client name and address
- Invoice number
- Invoice issue date
- Payment owed
- Payment due date
- Payment terms
- A detailed list of products or services provided
- Applicable tax numbers
Unclear Invoice Terms
Every invoice and contract should include clear payment terms. The client should already be aware of the payment terms, but you should ensure that they are also included on the contract and invoice and every subsequent invoice in the future. Most invoice terms are 30 days to pay the invoice, but you should set your terms to whatever works best for your company.
Not Following Up on Unpaid Invoices
If you don’t have a recurring payment system in place with your customer, you will have to depend on your customers to pay by your terms. You may have to levy a late fee if they don’t comply with the terms. You may also decide to give your client some space to pay. Either way, you must follow up with the client to ensure payment is made. If a client is not meeting the terms, it is a mistake costing you money if you don’t follow up.
Including Hidden Fees
You should never include any charges on the invoice that the customer is unaware of, such as added processing fees or extra hours or services provided that were not agreed upon prior. Adding un-agreed upon fees will lose you clients and could lead to legal issues if you have a contract or agreement that you are breaking by adding these fees.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.