A vital factor that is often overlooked is the importance of discussing the invoicing process with the customer early on in the relationship. Clarifying how and when the recipient would like to be invoiced from the get-go means the invoicing process will be smoother and prompt payment will be much more likely.
This may seem obvious, but a mistake many make is assuming that the person placing the order is the person in charge of settling invoices. This is not always the case. All businesses will have an account payable department – even if it’s just one person – and businesses must ensure that they have their full contact details. This is even more important when dealing with larger firms that settle invoices from a head office. Sending an invoice to the wrong person can cause significant delays to the payment process and may require additional time to be spent reissuing new invoices.
Finding a standardized format that includes all the necessary information is important when starting to create invoices. Not only does it look professional, but it saves a lot of wasted time further down the line. Businesses will soon find out that changing individual invoices is time-consuming and increases the likelihood of accidentally omitting a vital requirement that could potentially void the invoice if requested as part of an audit.
The terms and conditions are an essential part of an invoice as it lays out the payment terms in writing for the buying company. The details can be agreed on between the two parties during initial discussions however unless a specific payment date is set, invoices should be settled within 30 days of them being issued. Of course, businesses can introduce their own terms if they wish, such as discounts for early payment. It’s also worth noting that if it’s goods being sold, the T&Cs should include the policy on returns and exchanges for faulty items.
Just as it’s important to standardize invoice content, small businesses will make invoicing far more efficient if they stick to a regular invoice management process. This should include:
Another factor that regularly results in payment delays is not knowing the customer’s preferred method of receiving invoices. Previously, physical mail was the most important communication channel for businesses, however, today, businesses can utilize a number of other channels. As a result, businesses are adopting multichannel invoicing strategies that utilize both physical and digital communications. Knowing how the recipient wants to receive the invoice – whether by post, email, or both – will help improve payment response times and prevent the need to reissue invoices in different formats. Furthermore, it will avoid alienating customers that prefer to be communicated within a certain way.
Like communication, the number of payment methods has increased rapidly with the advancement of technology. For example, the check, while not completely redundant, is no longer the most popular payment choice with the rise of digital banking. With this in mind, businesses should have the capabilities to accept payment via a number of means, so that customers can pay using the method that best suits them. By giving customers a choice, invoices can be settled far more efficiently.
When sending invoices manually or via a basic email tool, such as Outlook or Gmail, it can often be difficult to ascertain the exact status of an invoice. Invoicing software can also help here by automatically creating an audit trail, enabling businesses to track where their invoices are much more effectively.
Many small businesses feel awkward when chasing overdue invoices, often not wanting to pester customers for payment at the risk of souring the relationship. However, it’s the buyer who has broken the agreed payment terms and, as such, companies are well within their right to chase. With stories of small companies turning to other expensive sources of finance – such as bank loans – to cover momentary capital shortfalls, businesses must do all they can to ensure they’re receiving prompt payment for their invoices.
How businesses are storing their documents is changing. The days of the filing cabinet are quickly diminishing. Not only are they an eyesore taking up expensive office space, but they are also a big drain on efficiency as documents have to be filed and retrieved manually. Cloud archiving is not just for enterprises; small businesses can also take advantage of its benefits. It makes it simpler to ensure compliance with data regulations.
One More Tip-Free Invoicing Consultation
From creating invoices to mailing them out on time, Neopost is here to help. Contact a Neopost Expert and discover what invoicing and mailing options are available to you and your small business. Call 1.800.NEOPOST (636.7678).