Whether you’ve recently started a small business or you’ve been trading for a while, invoices are a crucial part of your day-to-day processes. Without a good invoicing system, your finances will quickly fall into disarray. Not only will you find it harder to keep track of your profits, but your clients are less likely to pay you on time. Because a good, healthy cash flow is what keeps growing small businesses afloat, you need to think carefully about the way you’re invoicing. This blog has some important tips to take into consideration.
For a clear, easy-to-understand invoice, consider using a free invoice template. While some small business owners will be able to successfully design an invoice, templates are typically engineered to include all the essential information a client needs in order to make a payment easily. But don’t worry, you will be able to customise your template and add your own logo to make it appear more professional. Do remember that invoices don’t need to be incredibly creative or brilliant to look at – they just need to convey facts clearly.
Lots of new small business owners forget to set out clear payment terms as part of the invoices they send to clients. If you don’t know what they are, payment terms are basically a set of instructions telling clients how they can make a payment and when they need to have paid by. Failing to give clients a deadline is a recipe for disaster and can perpetuate late payments. Make sure you give clients multiple ways to pay and provide your bank details if you require a direct transfer of funds.
Invoicing software is by far the best way to manage invoices. Not only will the right package have lots of templates to choose from, but it will automatically generate invoices once you’ve made a sale. These will all be securely logged for your reference, making filing your taxes a much easier process. Try to find a software package that does more than just invoicing. Many providers offer services such as general bookkeeping, VAT calculations and payroll all in one handy package. What’s more, your software can send out invoicing reminders if clients haven’t paid by a certain time. This takes the pressure off your shoulders and allows you to focus on more important tasks.
Break down costs
While it can be tempting to just include a total amount payable on an invoice, it’s important to really break down multiple charges. This will help your client to understand exactly what they’re paying for and should reduce the number of questions they have. For example, detailing delivery and VAT charges will prevent them from getting confused and wondering why they’re paying more than they expected. You should also include any overtime fees or adjustments to the project that may have increased the total.
Changes to your invoicing system might cause some confusion at the beginning, but over time these tips will simplify and improve your processes.