Many small business owners may not realize that invoicing errors are more common that one might think. Avoiding the following invoicing mistakes will ensure that accounts are paid in full and on-time without any misunderstandings or lost revenue.
1 – Missing Information
Including accurate and comprehensive information will help prevent any delays and misunderstandings. Electronic invoices should include the company’s name and address, but they may also include hyperlinks to the website, departmental email or digital contact information. Be sure to include the due date, payment terms, and any required tax numbers.
2 – Invoice Itemization
Every invoice should include an explanation of each charge, such as expenses, flat fees or hourly rates for specific tasks, orders or project. The level of itemization detail that goes into an invoice often depends on the accountant, but it’s important to be specific enough to help the client understand and track what is being paid.
3 – The Right Person
Just because a salesperson generates a purchase order for a certain individual doesn’t mean that they will be responsible for paying the invoice. This requires continual communication with sales staff, who may be traveling or juggling multiple projects. The best way is to have the salesperson review major invoices before sending them out.
4 – Unclear Terms
When it comes to prices, quantities, descriptions, and terms of payment, vague and ambiguous language will create serious problems. Intentional misunderstandings and intentional misbehavior could result in over and underpayments. It’s best to have clients sign simple contracts because you can easily reference official terms and definitions.
5 – Procrastination
Sending out an invoice doesn’t guarantee on-time payment, but it does create timely opportunities to follow-up with clients. Many small businesses want to maintain rapport and stability, so they may avoid confrontations and not charge any late fees. However, these financial penalties create a sense of urgency and inform clients of your seriousness and the potential consequences.
As a final note, a specific due date is much better than vague statements with generic increments of 20 or 30 or days. A tangible date helps people to mentally digest and remember the deadline. Using a well-established bookkeeping and accounting firm will eradicate any chances of invoicing mistakes and misunderstandings.