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For many businesses, invoicing is viewed as a rather perfunctory action. An invoice is often given little thought or importance, and that’s a recipe for trouble. As a factoring company who processes thousands of invoices a month, we know how critical a properly constructed invoice is to the health of your business. If you want to get the most out of your business, and your customers, it’s time to implement best practices and ensure that your company follows them. To understand why this is such a critical step – and to see how so many businesses get it wrong – let’s dig a little deeper into the role of the invoice in your business.
THE IMPORTANCE OF PROPER INVOICING
In its most basic form, an invoice is simply a listing of the goods or services provided and an accounting of the sums due for same. Of course, it can also convey far more than that. It also serves a number of important goals. First and foremost, it provides all of the information needed to facilitate quick and smooth payment from the customer. Any mistakes or ambiguous information could lead to miscommunication, payment delays, and even disputes which often require time and resources to correct. By providing accurate, specific details on the services provided, the terms of the payment and the available payment options, you’ll see more timely payments and fewer delays.
It’s also a reflection on your business as a whole. Sending a bill that is disorganized, incomplete or otherwise flawed gives a poor impression of your business. Provide a clear, detailed, organized document for your customer, however, and you’re sending a message that you respect your customers, you take your work seriously and you value professionalism. By doing this, you’re more likely to have the same level of respect and professionalism returned to you.
ANATOMY OF AN INVOICE
It’s clear, then, that a well-designed invoice is imperative. Your needs may vary based on the nature and demands of your business, but there are several essential details that should always be included. To make sure that yours are up to spec, be sure to include each of these points in your invoicing best practices.
BUSINESS INFORMATION
Call it common sense, but your customers need to know exactly who the bill is from and how to contact you with any issues. Include the name, address and phone number of your business in a highly visible place. If you have them, you may also include your business logo and a number to your customer service department. When in doubt, it’s better to include additional information rather than risk leaving out an important detail.
CUSTOMER INFORMATION
Include the name, billing address, phone number and any other relevant contact information for your customer. If you’ve been working with a single person in particular, include their name and information as well. It’s generally advised to address a bill directly to a specific person – often someone in your customer’s Accounts Payable department – but be sure to ask before submitting.
INVOICE INFORMATION
Speak with anyone involved in a billing or Accounts Payable department and they’ll tell you there are few things worse than an unnumbered bill. Do your customers – and yourself – a favor by ensuring that you always include an invoice number. These numbers should be created in an intuitive way; sequential, chronological and quickly identified. Be sure to include a billing date as well, along with a due date or NET billing terms. The more information you can provide, the easier it will be for your customers to provide quick and efficient payment.
PAYMENT TERMS
Of course, it’s hard to make money if your customers don’t know how to make a payment. The best way to ensure timely payment is to offer a wide and diverse range of payment options, from check to credit card to bank transfer or even Paypal. While it’s best to discuss payment options beforehand, presenting a number of options makes it much easier for your customers. No matter what payment options you offer, be sure to provide all of the details your customers will need to complete payment. That may include bank account numbers, identification codes, remit addresses and more.
ITEMIZATION
Everyone wants to understand exactly what they’re paying for, and the same goes for your customers. Always include an itemized summary of any products or services included in the bill, taking care to detail the quantity, price and taxes for each item, the date of purchase and any applicable item or purchase numbers. Itemizing the bill also reduces the chances of a misunderstanding or dispute, which saves time and headaches for both you and your customers.
ADDITIONAL INSTRUCTIONS
Though not necessary, you may feel compelled to add additional instructions or information. This may include anything from specific instructions for completing a purchase to details regarding purchase order or receipt numbers, terms and conditions, product guidelines, special offer details or just about anything in between. If the customer has hired you for a large project, this is also a good place to provide information on project coordinators and other key personnel.
A THANK YOU
Last but not least, don’t forget to say thanks! Professional courtesy is always welcome, and the simple act of thanking your customers for their business often goes a long way toward making them feel appreciated. It’s also a good idea to invite them to contact you with any comments, questions or concerns. If you’re in need of testimonials to be used as part of your advertising efforts, it may also be worthwhile to invite customers to share their thoughts with you.
The simple reality is, a properly constructed invoice can be the difference between getting paid on time and getting paid late, or not getting paid at all. The more work you do up front on making sure your billing is as simple and clear as possible, the less chance for confusion on the part of your customer. No matter what your line of work is, chances are that details matter. Your invoicing is no different. And, while not a glamorous part of your business, it is indeed important to get right.
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