Small Business Saturday Blog

4 Invoicing Mistakes you Should Avoid in your Small Business

Monday, October 17 at 11:20

There’s probably no small business that hasn’t prepared at least one invoice for their work. For businesses many times invoicing is considered the boring paperwork no one wants to deal with. So often times preparing invoices is based on copying already prepared and pre-populated invoice documents.Proper invoicing is one of the ways for small business to ensure steady cash-flow and secure company growth. Below are listed 4 invoicing mistakes small businesses do and usable tips on how to avoid them when managing your invoices.1. Vague services and products descriptionThis part is the heart of the invoice, and you should always aim to make it as clear as possible. Many times clients can’t just predict what you’re charging for and this is especially true when you’re doing job for a bigger company where invoices are handled by their accounting department. With this in mind you should always state clearly what services you provided for them.Sometime the services (or products) you sell can take more than one line to describe.This is often case when you’re doing large project in several stages, so don’t be afraid in being more detailed when describing the work you've done.2. Complicated payment termsThis section of the invoice is probably the one that will make it or break it. So pay attention when stating you payment terms. Many times in invoices legal language and terminology is used but part of your clients maybe aren’t so business savvy and won’t understand them.Make it no brainer for your clients, write them in clear and simple manner. One study shows that using “21 days to pay”, instead of “Net 21” resulted in more prompt payments. Including late payment interest also can play big role in motivating your client to pay the invoice. In the end make sure the terms are accompanied with polite and friendly tone.3. Piling-up late invoicesIn ideal situation your clients will pay the bills the day you send them, but the reality is different and many times your clients will be late with their payments. They’ll all have various reasons and excuses for this delay, from lack of funds, to forgetting and sometimes even ignoring your invoices. And if you tolerate this too often you can face a big pile of late invoices in short time. Not only this, but you’ll also run out of money pretty quickly.This is out of your control but there’s a way to handle this in the most productive way. The simple rule for this is to follow-up with your clients. If you notice someone hasn’t paid the invoice remind them about the services you’ve provided and the invoice itself. Don’t wait too long to email or call them, the more time passes the likelihood of payment decreases. Invoices that are 6 months past due have 44% of successful collection, and for over a year due invoices the percentages drops to 25% for successful collection.4. Improper design and styleUsually this part is many times overlooked when creating an invoice. If you think “it’s just an invoice, why bother with the design” you’ll end up making mediocre looking invoice, that can lead to invoice information scattered all around. This won’t help in collecting your payments, and can even hurt your reputation.Your invoices shouldn’t be taken for granted, so be careful how you lay out the information about your company, client, terms and your services or products. As a rule always try to include your company logo and brand colours in the invoice. This will ensure you’re serious, dedicated and professional business person.AuthorBio: Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.

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