12th September 2022
Invoicing is a topic of great importance for businesses and enterprises of all sizes, from one-person bands to giant conglomerates.
Cash flow is any firm’s lifeblood; therefore, it is imperative that the invoicing procedures are functioning well.
It is a particularly pressing issue for small operations, as even the slightest problem or delay in payment for the service you have provided can have serious ramifications.
Setting clear procedures and policies regarding invoices could play a big part in your venture’s eventual success or failure.
Invoicing – the basics
While the process can sometimes become complicated, invoicing is a straightforward concept. If you have provided a product or service to a customer, you must give them an invoice (a bill) requesting payment and setting out certain critical pieces of information.
- The document must have the word ‘invoice’ very clearly presented and state how much the customer owes and the deadline for payment. It should also include your company’s name, address, contact information, and the organisation you are invoicing.
- If you are operating as a limited company, add your firm’s registration number to all invoices and the organisation’s full name as it appears on the certificate of incorporation.
- As a product or service provider, you have a legal right to receive payment. Unless otherwise agreed, customers are expected to complete payment within 30 days of receiving an invoice or the service.
If you find yourself in a situation where you need to request payment of what is owed formally, you can use a statutory demand.
Several strategies could make invoicing easier for businesses of all sizes.
Adopting a “payment mindset”
Owners of small enterprises, particularly those just starting out, are often too timid when chasing up sums they are owed. The strategy here is to be polite but firm. Remember, your clients aren’t doing you a favour by paying. They must pay you, no matter how big or small they are.
Do the basics well
Ensure that all invoices are sent promptly, are sufficiently detailed and reflect the terms of your contract.
The layout of invoices should be concise, with information such as dates, amounts, and, if necessary, VAT details presented. Remember to include not only when the payment is due but also details on how you want them to pay – for example, by giving your bank details.
You may also consider asking for a deposit payment in advance and should be sure to chase outstanding invoices and keep dated records of all conversations.
Rethink your payment terms
You have no obligation to offer 30-day terms, so try using 14-day payment periods instead.
An analysis by Xero found that payments are typically made two weeks late, regardless of whether they are due immediately or within 30 days. So, if you aim to get paid in 30 days, you should make your payment terms 14 days or less.
People just starting out in the world of business will want to focus their energy on winning their first sales or contracts and gaining experience, so they might need some support with administrative tasks such as invoicing.
It is possible to find free invoicing software on the internet, such as Invoicely and Sumup. However, like anything free, these solutions have limitations, so people willing to pay for a complete service could consider options such as Sage, Quickbooks and FreeAgent.
If you prefer to do it yourself, there are, of course, plenty of easy-to-find free templates and resources online that could prove helpful in creating invoices. Just make sure you follow the advice above.
We are here to help
We hope you’ll find these tips helpful. We are here to help, so if you have any questions, please do not hesitate to contact us by calling 0800 917 9100 or emailing firstname.lastname@example.org; we would love to hear from you.