Three invoicing tips for small businesses

Three invoicing tips for small businesses

Invoicing is a vital process for small businesses, but it also represents time-consuming admin for business owners whose attention is pulled in many directions. 

An invoice is a request for payment, listing goods or services that have been supplied to customers, and what they owe. Getting an invoice wrong could be hugely damaging, leading to customers refusing to pay or paying too much or too little, and can lead to late payments. This is bad news for all concerned.  

Invoices are also important tax documents, and copies must be kept to show all revenue earned and any tax collected on the sale. If invoices don’t comply with HMRC requirements, small firms may face potential fines and enquiries. So, how can small business owners make sure they get invoicing right? 

Give adequate warning

It’s vitally important to ensure your customer isn’t taken aback when an invoice lands in their inbox. Sharing the invoicing schedule with customers, even before you start working with them, is an excellent way to avoid this.

If you’re sharing an invoice with a customer for the first time, you can also get in touch to check that the invoice has everything they need. This hands-on approach will be welcomed by customers, and can also help avoid excuses around late payments.

If the payment date comes and goes without the customer making the necessary transaction, you should be in touch the next business day. While you don’t want to antagonise a customer, you still need to set expectations around payment processes, and this can help you do that.

Remain consistent 

Finding a regular time dedicated to invoicing will ensure that it doesn’t slip from the to-do list, even as responsibilities mount. 

Invoicing once a month is not necessarily the best approach, especially if the billing process is at the end of the month and the work is completed at the start. It also gives customers a few extra weeks to make the payment, which may impact your business’s cash flow. Instead, set time aside to bill weekly or even more frequently, if necessary. 

Some of the information required will stay the same from one invoice to the next, allowing you to streamline the process. Why not set up a template to fill in that can eliminate copying, pasting and formatting? 

Whether you opt for Microsoft Word, a spreadsheet with formulas that calculate totals and taxes, a template that comes with your invoicing or accounting software, or free templates online, you can save yourself time by getting this structure in place. In addition, cloud accounting software can speed up many of the processes around billing ‘ from template options, creating quotes, allowing mobile-first options, and scheduling automated reminders so you don’t have to spend time chasing.

Know what to include

Understanding what exactly needs to be included in an invoice is a stumbling block for many small businesses. An invoice needs to name the seller, the buyer and what was exchanged. Depending on your business you may also need to include whether you collected VAT on the sale. 

It’s important to include a description of the goods or services, so the customer knows exactly what they are paying for. 

Finally, keep your invoices concise but with enough detail to ensure the customer doesn’t need to come back with questions. More detail can be provided in an attachment, and keeping the invoice short and to the point will avoid confusion. 

Get invoicing

While these tips should simplify the invoicing process, it’s still important to remember that support exists. If you cannot find time to take on this crucial task, why not ask a bookkeeper or accountant for help? Regardless of how you choose to tackle invoicing, getting it right is a necessity, and can help your business thrive.

Damon Anderson
Damon Anderson

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