Guide to Invoice Management for Small Businesses
Small businesses already have a lot on their hands, from executing market research, establishing themselves in their niche market, and tons of paperwork to sort, file, and process. However, one lingering problem also adds to their already rich catalog; having their clients pay when due.
Accounting and invoicing are two crucial aspects of a company’s day-to-day operations. When invoicing becomes an issue, it may be a sign that there’s something your organization isn’t doing right. If you have similar suspicions, read on to know how your firm can improve its invoice management.
To effectively manage your invoices, one must understand what an invoice is and what it should contain.
What's an Invoice, and what should it contain?
An invoice can be defined as proof of a transaction(s) between a seller and a buyer. It’s a document that confirms sales between two parties. It doesn’t matter if the issuer is an individual freelancer or an organization. Anyone can issue an invoice.
Certain things must be on your invoice to make it correct. Information that should be on your invoice includes:
- The subject of the transaction
- Invoice amount
- Payment deadline or due date
- Business name
- Client contact details
- Transaction date
- Invoice issue date
- Invoice name
- Invoice number
- Payment method
- Terms of payment
We recommend using document software such as Draftable to write invoices for your clients.
An invoice without one or more of the information mentioned above can cause issues for a company’s account receivables and payables. An invoice can make both the buyer and seller secure if there is a need for further claims on the transaction. By claims, we mean complaints about the subject of the transaction or possibly, a return.
How can Small Businesses manage their invoices efficiently?
Choose a good Invoice Management Software
To make invoice management easier for your organization, we recommend acquiring good invoice software such as invoice extractor from Affinda. You can feed the software with the company’s custom template. The beauty of this software is that your organization can seamlessly automate its invoice management.
This will save your organization precious time that can be channeled to other aspects of the business. As your business grows and gains more clients, this will result in the issuance of more invoices. Since invoicing is now automated, it won’t be a problem.
Have a Custom Template and ensure it contains all the Relevant Data
While some companies adopt popular invoice templates, others use custom templates. Whatever template you adopt for yours, ensure that all the details mentioned above are there.
Omitting even one can result in non-payment or late payments of invoices. Both consequences will be disastrous for your account receivables, which will hinder your ability to make payments to parties you patronize.
For instance, having your business’s contact details makes you accessible if the customer has questions regarding the invoice you sent. The due date or payment deadline helps your clients know how soon you will like the payment made. Payment methods help them know your preferred means of receiving the payment, whether through a check, wire transfer, or digital means such as cryptocurrency or PayPal.
Also, ensure you list or itemize the services rendered or products sold. State their prices to ensure it adds up to the total amount. Putting the total amount just like that will look vague; your customers should know what they are paying for.
Be mindful of the dates
Three dates should be on your invoice, and they’re all equally important: your issue date, sale date, and due date. The latter has already been discussed, so we’ll focus on the issue and sale dates. Ensure the issuance and sale date on your invoice is cross-checked.
Giving a wrong sale date can result in non-payment because the customer can easily assume that the invoice is meant for someone else. Using invoice software covers all these because the dates will be accurately entered.
Send the Invoice on Time
After drafting the invoice and verifying the accuracy of its details, the next thing is to send the invoice to the client. There are different options to send an invoice, but we recommend using a digital option to make it faster and easier.
Ensure that your clients have a working email address to avoid sending the invoice through courier service. However, if they are not attuned to email usage, opt for courier service. We recommend sending your invoice as a PDF with footnotes or short comments for the customer.
Ensure there’s some space between the issue date and the due date. This gives your customer time to review the invoice. Don’t send an invoice and expect payment the next day.
Following up after sending the invoice should be the next thing. A lot of companies fail to follow up. Following up is essential because it ensures that the customer has received the invoice. If you sent it through email, follow up via email as well. Using invoicing software helps because it sends and tracks the invoice.
Following up ensures the invoice is paid on time. It also helps to remind clients to pay invoices when they are overdue.
To Sum Up
The hack to efficiently manage your invoice is through good invoice management software. Once invoicing automation is achieved in your organization, it usually covers other invoice management tips. So we recommend automating invoice management; it’s a good investment for the organization.