Best Invoicing Practices
Invoicing is an invaluable accounting tool in any business. An invoice represents an accounting document that keeps the information about the transaction between a company and customer, or between a seller and a buyer. When internal controls and audits come, invoices are the key element of company reports.
The earliest known invoice comes from the Upper Paleolithic era, and it is represented by Inshango bone. On the bone are bunches of lines, which is believed to represent a mathematical tool of that time. It was used to count and record exchanges between traders of those times.
The invoicing history is long and interesting, it was different as we know it now. Technology started to be used in 1904 for invoicing creation, and in 2019 the invoice automation began.
As the invoicing process goes through different changes, we need to be aware of the best invoicing practices in 2021, for better business quality and accounting transparency.
Let’s analyze together 7 invoicing must-haves.
Keep it simple
“All ingenious is simple '', therefore, when you create an invoice you need to keep it simple. It should be simple to understand and see all the necessary details at a glance, for a better customer experience. You do not have to make it more complicated than necessary using jargon or extending your invoice on more pages than it requires. Moreover, you should make your invoice as straightforward as possible. There should be stated what for the customer is invoiced. Therefore, your invoice must show what services or products were delivered, when, and the amount of money for them.
Automate repeatable invoices/requiring
Nowadays, every process could be automated through the technologies of our century. Now you are not forced to create invoices manually every month, trimester. Online invoicing tools automate repeatable work and save your time. Moreover, invoicing platforms reduce significantly the chances of human error.
Usually, people have more than a single invoice. It could be hard to keep in mind all due dates and to respect them. It is frustrating when it's close to the due date, but the customer did not pay you. It is recommended to send our customers a friendly reminder about the invoice, before its due date, if it has not been paid yet, but to remain professional. You could reach out to your clients via email or a call, and to ensure that the invoice was received. Moreover, you could consider using online invoicing platforms, as almost all of them have such functionality.
Invoices should be easy and simple to pay. You might consider more options of payment, giving your customers the possibility to pay in a way that better fits you. It is recommended that these options be presented on your invoice. Digital invoicing platforms as usual include an online or mobile payment service to make the payment faster using the credit card or bank account. Online applications let your customer pay directly via PayPal, or other software payment methods.
Address company and customer
When you create the invoice, take care to include there the essential information:
- The date when the invoice was created and send to the customer;
- The number of the invoice;
- The invoiced time or billing period;
- The company name, and address;
- The customer name and address;
- The bank account details;
- The services or products that were delivered;
- The invoice payment options;
- The invoice due date;
- The taxes, if applicable;
- Also, you could include some important information in the invoice notes.
Having all the important information on the invoice speeds up the process of invoice payment. The three most important pieces of information are considered the total amount that should be paid, the due date, and the terms of payment. Having this information will keep everyone on the same page, and ensure that everything is clear for both sides.
Consider using read receipts
Emails are considered one of the most stable methods of communication. You could use it to send your invoices in a direct, fast, and secure way. Read receipts are a functionality supported by almost all emails and invoicing tools. Using read receipts you are informed that the customer received your email, and read it. This is useful as it helps you to understand that the customer is aware of the invoice that you have sent.
Consider using online accounting apps
Online invoicing platforms make your invoicing process much easier. As it creates almost the entire invoice for you, you just need to create an account, add your company and clients information there, link the bank account, add the services or products that you deliver, and select all this stuff when you create the invoice. It is cool that you fulfill this information once and you could reuse it whenever you want to create a new invoice. Moreover, if you need to send an invoice every month to your customer, you might use the required functionality that a lot of applications include. Thus, you may just create the invoice once, select the requiring time that you need, and it will be created automatically and sent to the customer every month, or trimester, depending on your needs.
Therefore, here is a list of some online accounting and invoicing applications that you might consider:
- QuickBooks. This application is considered to be a good one for small business owners.
- Goodbudget. This one is recommended for beginners.
- Freshbooks. Another good application for invoicing and expense tracking.
- Oklyx is the platform that can help you keep track of your expenses and invoices in a single place. Also, it is a free app.
The bottom line
Invoicing is an important key in cash flow. If you are doing it professionally, it reduces your overall stress regarding your business and company accounting. Your business success is directly dependent on how your invoicing process is working. Be open to learn more about invoicing and follow the invoicing best practices for a better company activity, and to increase your profit.