Managing finances is one of the core components of running a successful business, regardless of the industry or the size. Billing and invoicing is a part of your financial management, and neglecting them can be a costly mistake. No matter how cumbersome you find the billing process, it’s crucial to pay attention to it and focus on streamlining measures.
Even a simple mistake can end up costing your business in a big way. Billing and invoicing errors can hinder cash flow, and the ripple effect will be felt across the organization. Delayed payments can strain your relationships with suppliers, employees, and other stakeholders. If such errors are deemed fraudulent, they can even lead to an investigation and significant damage to your business’s reputation.
From small clerical errors to making invoices too complicated to pay, this post dives deep into certain erroneous invoicing and billing practices impacting your cash flow. Take a look.
Not Generating & Sending Invoices on Time
To put it in simple words, the longer you wait to send out invoices, the more delayed your payments will be. Ideally, you should generate and send invoices right after the completion of a sale or your end of the agreement. Online payment solutions have made it possible for organizations to send, receive and track payments seamlessly. Instead of relying solely on your memory or reminders, you can access all your invoices in one place.
Expecting Payment Without Sending an Invoice
A verbal agreement or a handshake is not enough to ensure on-time payment. First, it’s a smart move to create and sign a simple contract because loyalties can change quickly in the business landscape. Second, you cannot rely on a customer to remember to pay for your products or services without an invoice. How will they know what to pay? An invoice specifies the purpose, exact amount, and the authorization to make the payment.
Never Sending a Follow Up
Most entrepreneurs have a million things on their plate. So it comes as no surprise that they might forget about paying for your services even after receiving an invoice.
What do you do when a prospect doesn’t respond to your message on LinkedIn? You probably send them a follow-up using LinkedIn automated messages. Similarly, sending follow-ups is a good practice to remind clients of unpaid invoices.
Manually keeping track of unpaid invoices and sending follow-ups can be quite time-consuming. You should consider adopting invoicing software to automate such tasks.
Unclear Payment Terms
Clearly stating payment terms on invoices is of paramount importance. Any vagueness in your invoices can lead to misunderstandings and delayed payments. Make sure you are using easy yet descriptive terms and specifying all the key details in your invoices.
Not Including an Itemized List
Just like you, the client is probably doing business with several other vendors. Not providing an itemized list in your invoice can make payment difficult. They would have to make an extra effort to figure out what all things you’re charging them for. It would be best to include an itemized list in your invoices for added client convenience.
Not Sending Invoice to the Right Person
You probably won’t receive payments on time if you send an invoice to the wrong person. Prevent unnecessary confusion by establishing the point of contact when you get into an agreement.
Adding Hidden Fees
Your business relationships can quickly turn sour without transparency. By including hidden fees in your invoices, you’ll end up blindsiding clients and damaging your reputation. Avoid schemes to make quick cash and focus on sustaining long-lasting professional relationships.
Limiting Payment Methods
Not diversifying your payment methods can result in late payments and poor client experiences. Your business should provide clients with numerous popular payment options for faster payments. you can allow them to pay with a check, credit card, bank transfer, online payments, mobile payments, and so on.
Forgetting to Mention Late Fees
If there are no consequences of late payments, some deadbeat clients may delay payments indefinitely. And that’s not good for business. Mentioning late fees on invoices helps create a sense of urgency—this a simple yet effective tactic to ensure that your invoices are paid before the due date.
Failing To Brand Invoices
Everything can be a branding and marketing opportunity, you just need to have the right vision. Adding your company’s logo on invoices helps clients distinguish your business from others. You can further promote your business by sending newsletters and flyers along with invoices.
Relying on Manual Data Entry
We are steadily moving towards automation, and it’s high time to upgrade your invoicing process accordingly. Relying on manual efforts makes invoicing time-consuming and also gives leeway to mistakes. In addition to investing in a reliable invoicing system, start storing and backing up all your invoices on the cloud. This will allow you to access invoices anytime and anywhere. Also, this allows you to further enhance the customer experience with long-tail automation.
In the grand scheme of things, entrepreneurs may consider invoicing and billing processes trivial. But these processes play a key role in helping your business maintain a positive cash flow and nurture relationships with various stakeholders. Hopefully, the aforementioned tips help you identify and navigate different issues associated with billing.