Invoicing isn’t exactly the most thrilling of business processes, especially when you want and need to focus on the day-to-day operations of your creative business. However, without invoicing, you won’t get paid – or be able to keep your accounts on track – so it’s a crucial task to undertake.
Invoicing can go from being merely tedious to downright bothersome when issues arise (like having to justify costs or dealing with debtors). We’ve put together some essential dos and don’ts to help you make invoicing a straightforward process. Let’s dive in!
The dos of invoicing
Do make invoicing a priority
Invoicing not only ensures you get paid; it brings money into your business and helps you manage cash flow. In other words, it keeps your business afloat! Invoices are an essential part of record-keeping for taxes, and they’re also mandatory in the UK if both you and your client are VAT registered.
So, at the end of each month, or after a project completes, schedule some time to knuckle down and do your invoicing. Timing is important. Sending an invoice too early before a project or service has been carried out in full can result in your client feeling a bit miffed. Sending them too late after work has wrapped up can negatively affect the client’s cash flow – not the best way to make an impression.
Do avoid surprises to avoid challenge
Be sure to itemise all deliverables on an invoice so that there is no confusion. If the invoice is larger than the quote you provided initially, it’s worth a quick phone call to the client before invoicing to make them aware of why and how extra costs have been incurred.
Being transparent about escalating costs when they happen reduces the risk of difficult phone calls where you have to justify your work and time.
Do use clear payment terms
On each invoice, clearly state the payment due date and your terms for payment, for example, within 30 days upon receipt of the invoice. Also, check that you’ve included your business bank details or other payment collection methods so there can be no uncertainty about how to pay.
Do follow up on unpaid invoices
When invoices become overdue, chase them up. The first step is to issue a payment reminder and, within that, mention your late fees. It’s up to you whether you want to charge late fees straight away. But for the sake of forging good relationships with your client, you might opt for a softer approach and offer them a friendly phone call reminder first.
Do consider using software and automation
Managing your accounts digitally through software can help reduce errors and save you time. Using a platform such as FreshBooks, QuickBooks or Zoho Invoice, you can generate and issue invoices quickly and follow up with automated reminders.
Depending on your business type and where you’re based in the world, using software may even be compulsory. For instance, in the UK, HM Revenue & Customs is already rolling out a government initiative called Making Tax Digital which will affect most UK businesses by April 2023.
The don’ts of invoicing
Don’t send invoices to the wrong contact
Sending an invoice to the wrong person, department – or perish the thought – the wrong client, will only result in a payment delay, with you most likely having to reissue the invoice once you figure out your mistake.
Delays aren’t the only possible consequence, however. Sending invoices to the wrong contact could inadvertently lead to a data breach that puts you in violation of your contract.
Don’t forget to use a numbering system
Only when you start receiving a stack of payments into your business account will you appreciate the beauty of a simple numbering system. Invoice numbers provide you with a quick and easy way to identify each invoice and track payments as they come in. When a client pays, they’ll reference their invoice number, so you can match the funds to the relevant invoice and mark that invoice as reconciled.
The general rule of thumb with invoice numbering is to make every number unique and to assign sequential numbers. For example, CN001, CN002, CN003 (CN being the client name).
Don’t neglect backing up your invoices
Here’s a terrifying thought – imagine that you knock a cup of coffee over the device where you’ve been storing all your invoices… To avoid anything happening to these critical documents, always back them up, preferably to the cloud, where you can access them from any device. (Unless you’re using invoicing software, in which case, this task is taken care of automatically by the provider).
Don’t send an invoice without double-checking the math
Always double-check your calculations (and the currency) before issuing your invoice. If the client doesn’t notice an incorrect amount at first, you’ll get paid the wrong amount. That causes problems later down the line, either by having to issue a partial refund (if you were paid too much) or having to send another invoice (if you weren’t paid enough). This is inconvenient for both parties.
It goes without saying to proofread your invoice and catch any spelling errors too! After a job is done, it’s tempting to quickly fire off an invoice without a second thought, and this is when little mistakes can happen.
Don’t forget your logo
That leads us nicely onto the final ‘don’t’. An invoice should contain your logo at the very least because it’s a piece of documentation coming from your business. Therefore it should reflect your branding. After all, you’ll have put considerable effort into landing your client and delivering the work required. So it’s good practice to finish the job with a professional-looking invoice.
Want more information about business finances? In our membership area, we have a brilliant Masterclass on the topic of Finance Basics. In it, you’ll find out how to choose your corporate setup and organise your finances, plus learn the importance of setting up a separate bank account. You’ll also discover why cash is king and pick up more tips on invoicing and keeping track of your income.
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