Running a business is a lot of work, and sometimes invoicing runs late and mistakes are made. It’s all part of the territory. It is important to get your accounting and invoicing systems under control before missteps escalate into larger problems for your company. Invoicing incorrectly could lead to late payments and serious financial mistakes for your clients and customers. Making sure you invoice properly is an important factor in managing your company’s revenue and flow of cash. Dedicating time to invoicing correctly will help you properly perform daily business operations.
Below are some pointers to help you invoice in a proper and timely manner:
- Plan your invoicing. Once you have put in the time and completed the work, invoice it immediately after (unless your agreement states otherwise) so that you don’t put it off and potentially forget about it. If you’re performing work that needs client approval before invoicing, make specific notes to yourself or teammates for following up. Give specific details in regards to project reviews and dates for invoicing to be filed.
- Including the proper information. Invoicing should be easy, so make sure you are including the key components to make life easier for you and the customer/client.
- Your business name
- The date of the invoice
- Your Federal Tax ID Number
- A detailed description of the product or services provided
- Total amount due (be sure to indicate that if there is a per unit cost)
- Terms of payment. (For first-time customers you may want to consider making them pay C.O.D., until you know they are credible)
- Any discounts discussed, such as discount for cash or early payment discounts
- Follow up on invoices. Invoices should never be overlooked. Invoices are how your company receives payments. Create a system for yourself and your business where you can keep track of whether invoices have been sent, to who they were sent and whether a follow-up is necessary. Once the due date for the invoice has passed, follow up immediately to eliminate any further problems.
- Run credit checks. Before signing an agreement for a manufacturing and/or delivering a large product or an expensive project worth a lot of money and time, investigate the customer by running a credit check. If you’re doing business with another business, you can use Experian to run a proper business credit check. Consider requesting a precise deposit if the amount or project type warrants it.
EJ Dealy is CEO of The Company Corporation, which provides incorporation services to small businesses and entrepreneurs nationwide including incorporating in Delaware, Florida, and California. The Company Corporation does not provide tax, legal, or financial advice.