Preparing Small Business Invoices 101
As a small business owner, preparing invoices is one of the most important things you’ll do. After all, your invoices are the first step in generating income to keep your business running as well as pay your personal bills. Your cash flow will be much better if you do your invoices properly, send them promptly, and follow up on them.
Good invoice habits and billing processes will help you make sure that invoices are paid on time, reducing your need to follow up on late payments.
In this article, we’ll outline some of the Do’s and Don’ts of small business invoicing.
Do’s & Don’ts of Small Business Invoicing
Every interaction with your customers is a reflection of your business practices. Therefore, take advantage of this one, using it to impress your customers with your timeliness and professionalism:
DO avoid surprises
First of all, you need to make sure that your customers are aware of when they should expect to receive an invoice. Make sure to clearly list every charge separately to avoid confusion. Show your customers that you are predictable by making sure the invoice matches the estimate and contract. If the invoice is higher than the estimate or new charges are added, make sure your customers understand the difference.
DO get dates right
In addition to your business logo and contact info, the date should be prominent so that your customers are aware of when the payment is due. Additionally, the dates for completion/delivery should be part of the item descriptions.
DO follow up
If you do not hear from your customer after sending out an invoice, take the time to follow up with reminders. Sometimes invoices get lost in the mail and emailed invoices end up in the spam/junk folder. Once you are sure the client has received the invoice, start tracking the days/weeks until the due date.
Clear payment terms with a deadline are critical because they give you a basis for follow-up if you do not receive payment.
DO make sure the invoice design is clear
Your invoice is the public face of your business. Make sure that you showcase your brand and include your logo. However, this isn’t the place to be cute. You must make sure that the information is clear and easy to understand.
DO be detailed
Sometimes, when it comes to customer communication, less is more. However, this is not the case with invoicing. By listing itemized products/services, fees, costs, expenses, and relevant dates, you reduce disagreements and ensure that you are paid what you deserve.
DON’T be shy about sending invoices
When you’re just getting started in business, you may feel awkward about asking for payment. However, when you are confident about asking for payment, you show your customers that you believe your products/services have value.
You don’t want to send out an invoice before a milestone has been completed but you don’t want to wait too long after completion to send it. Make sure to send it while the project is still fresh in their mind- which goes back to avoid surprises.
What Should Be on an Invoice?
There are certain things that should be on every invoice:
- Invoice number
- Business contact info
- Customer contact info
- Business tax ID
- Invoice date
- List of charges
- Tax line
- Total due
- Preferred payment method
- Personal touch
Professional Invoices are Good for Your Business Health
Your invoicing practices have an impact on your cash flow. If you need help with your invoicing, contact Charis Commercial Capital. We can help you understand and implement these best practices for invoicing.