Indulge In Invoicing Correctly
The importance of clarity.
A key part in avoiding being owed outstanding debts by clients is invoicing clearly and correctly. The client needs to be able to easily see how much they owe you for your products or services. You will also need to present your invoices to a debt collection agency should it come to an unpaid invoice leading to outstanding debt, so it is essential that they are clear, concise and correct.
“I’m shouting at you, can’t you hear my voice? What do you mean you haven’t received my invoice?”
– Kerry Bland.
Keep the layout simple, you don’t need to over complicate things and it’s best to stick to a basic template of contact and payment details at the top, details of the products/services that you are billing for below and a clear total at the bottom. Your contact and payment details should be thorough and clear; a fussy and complicated invoice is more likely to make its way towards the bottom of a client’s ‘to-do’ list and delay payment further. Ensure your final total is inclusive of VAT, discounts, offers and promotions, postage, expenses and any other extra charges. These all should be clearly listed and totalled cumulatively.
Why not save yourself some time and use a template, good, basic invoice templates can be downloaded from websites such as freelanceuk.com and freelanceadvisor.co.uk. Once you have a template add these top tips to ensure your invoices have big-voices.
· Clearly state your payment terms, eg; ‘payment must be received 30 days from date of invoice.’
· Offer discount on next purchases for payments received inside normal trading terms.
· Itemise if applicable eg; ‘5 phone calls and 2 letters’, ‘17 widgets supplied at 15p per widget.’
· Include the contact name(s) of the person who is likely to authorise payment, this is the person who deals with your accounts and invoices. If this person isn’t you, ensure you add their name so it gets sent back for their attention.
· If requested, supply purchase order numbers.
· If e-mailing invoice, also send by first class post to be double-sure it is received.
· Send an interim invoice to “test the water.”
· Try and set up a monthly retainer, preferably by standing order.
· Offer various ways to pay eg; Bank transfer, credit card or even PayPal.
· Make sure both your company registration number and the VAT registration number are clearly displayed.
· Give each invoice a unique number in the header. This number is often prefixed by the client’s name eg; ‘JONES456’, this can be used as a future reference for both parties. Invoice numbers are mandatory for VAT registered traders and companies.
· Put your bank details on the invoice to make it easier for bank transfers and to prevent delays.
Consider factoring your invoices (selling your invoices to a third party before they are paid by your customers.) Factoring is a good option to ensure regular cash flow but it can be expensive. On average, factoring fees generally range from 1% to 12%. Factoring is unlike other forms of finance such as an overdraft or loan as acquiring it normally requires little personal security as it is secured against future income (money you have already earned.)
Overall, clarity, consistency and simplicity are the keys to effective invoicing. Follow our tips and use online templates to create a clean, easy to read and more importantly, easy to pay invoice! An invoice like this is much less likely to end up at the bottom of a pile and much more likely to turn into hard earned funds in your bank account!