Having and delivering the correct invoice is crucial to have a healthy cashflow in your company. From an accounting standpoint, this commercial document is the reason you can have your clients pay you on time (which for some businesses often that is an unusual situation that makes them struggle economically).
That's why, most organizations today appear to rely on new technological solutions, such as AI tools. These companies regularly think that it is unnecessary to modify and enhance the structure and content of their invoices as they assume that the predetermined template or information provided by these tools is more than adequate for their customers (which is not always the case)
Of course, I'm not suggesting we shouldn't use these tools in our company's operations as IA technologies have been created to improve our lives.
However, what I'm attempting to convey is that all organizations should be held accountable for learning the primary components of these technologies in order to enhance their invoicing and achieve greater outcomes while maintaining a healthy cashflow.
About My Experience
When I was working in my former organizations' accounting teams, I realized and, of course, recalled the enormous effect of this commercial document when it was issued with the proper or wrong information. We were always dealing with three major issues when sending invoices to our customers that affected our cashflow: incorrect information or charges, incorrect format or layout, or delivery timing issues.
What I've learned facing these situations is that the organization and staff inside the corporation are critical in avoiding these scenarios. However, it is obvious that not every company has the option of having a team that covers everything and ensures every step is done correctly, (which complicates the operation even more and affects badly to the cashflow)
Of course, If that's the case, you may get started using Bookkeepfix. We are prepared to face any situation your company or small business could be facing right now.
If you're familiar with these circumstances but don't have the time or money to form a team or design an invoice style for your specific needs, we've got you covered. We have prepared a template that might assist you in merging these experiences and information so that you do not have any problems. Click the following below:
To assist you learn more about the essential and fundamental concepts of an invoice, I will touch on the following:
What's An Invoice?
An invoice is a business document that the seller always provides to the customer. This document outlines the goods, quantities, products and services, and prices. An invoice basically serves as a document containing a formal request for payment.
The invoice contains multiple characteristics and information that should be included when delivered to the client. They all depend on the sort of organization, products, or services that the seller provides to the client. However, there is a baseline framework that all invoices should follow while being created.
Nowadays, most of these documents are electronic rather than tangible. This gives the seller more options for modifying it without affecting its structure. Companies may occasionally need a printed version of these, but believe it or not, this is only to prolong the payment process. Do not fall for it.
That being said, I briefly will demonstrate how to put together an invoice with the most basic information so that we can ensure we are delivering the correct details to the client.
How To Create An Invoice?
We can generate an invoice employing a variety of technological solutions, like Google Sheets, Microsoft Excel, and even Microsoft Word. However, before utilizing these tools or printing any invoice from your accounting software, ensure that your invoices contain at least the essential information before your send it to your customer:
Seller and Client Details
The seller and client details is essential for the invoice information. In the customer section, enter the Bill To, Address, City, Zip Code, State, and Country. For the selling side, include the company's legal name and, if necessary, contact details.
Invoice Number
Always provide a distinctive and unique code or reference for the invoice you are going to deliver. That is important for properly maintaining your bookkeeping records and for collecting the amounts in case the customer does not pay on time.
I recommend you include some alpha-number combination references so that the client and your internal team can understand what is being billed in that invoice.
For example BSMS0001. The letters could mean the following:
B: Bookkeeping
S: Service
M: Membership
S: Standard.
Dates
Include the invoice's billable and due dates. This will help you track payments while also preparing the consumer to pay this invoice. If you do not have credit terms, the due date information must explicitly declare that payment is required in cash on delivery.
Payment Terms
The payment conditions you have established with your customer must be explicit and contain information relating to the following if any was agreed at some point:
1. Due date for payment.
2. Credit Terms in days. for example: Net-30 days.
3. Acceptable Methods of payment for your products or services.
4. Payment penalties for late payments.
5. Discounts for early payments.
Description Of Goods Or Services
Always offer clear and complete information on the services or items you provided to the customer. If your invoice is for services, be sure to include the following:
1. The description of the service.
2. The date you completed it.
3. The hours worked.
4. The fee per hour.
If you are selling things, make sure to include the following in your invoice:
1. The description of the product.
2. The quantity
3. Pricing per unit.
Total Amount Due And Balance Due
The total amount should be different than the balance due. Normally, the total sum represents the actual cost of all services performed or items purchased by the customer. The balance due is the amount that the client still owes you from the entire amount that you billed.
When collecting late payments from your clients, pay particular attention to these amounts and keep on mind their difference as that this part is essential to have a healthy cashflow.
Payment Instructions
You should mention the main payment method information so that your consumer may remit a payment. Include any important information about your bank and accounts so that your customer can pay attention when sending a wire, for example. Also, make sure that these accounts get the currency that your consumer intends to pay you with.
Terms And Conditions
It is usually necessary to establish some additional terms or conditions relating to the transaction that you are conducting with your client. Be sure you include the following information in this section:
1. Warranties
2. Return Policies
3. Dispute resolution procedures
Discounts And Taxes
Make sure your invoice includes the amount of any discounts you agreed to with your client for any goods or service. Also, when determining the total amount payable on your invoice, make sure to include any taxes imposed to the transaction so that your consumer is aware of the increase.
Remember, If you urgently need a template for getting any payment from your service don't hesitate to click the button bellow:
When is it best to send in an invoice?
When delivering invoices to your clients, promptness is important. The timing in general may change based on multiple aspects of your business, for example, your rules or policies, the conditions you negotiated with your consumers, or the type of the items or services you provided. However, ensure that your staff sends invoices as soon as they are billed, at least.
Remember that for certain clients, time begins to run when they get this commercial document, not when you bill them in your internal accounting software.
Here, I will give a few suggestions for delivering invoices to your clients based on the timing scenarios that I personally use:
When The Services Or The Product Is Delivered
This one appears to be obvious, but in fact, it is not. Make sure that your policies claim that you will be billing customers after the service is completed, and take note of the time stamps so that your staff is able to bill them on time. Most businesses lose track of when they charge for services after they are delivered and that hurts a lot the cashflow. In this situation, communication with your team and the customer is essential.
Before The Services Or The Product Is Delivered
Ensure that your billing conditions with the customer are set up to charge them before delivering your products or services. You may negotiate out some payment plans with your customer which generally is pretty convenient. This method of course will allow them to have enough time to complete your invoice.
Having Regular Billing Cycles
When consumers request continuing projects from your team, this approach and interval could help both you and your customer in terms of organization. Furthermore, if the customer pays you on time and according to the terms agreed upon, your cash flow will be more consistent.
Of course, if you or your team are experiencing trouble issuing and delivering invoices to your clients, you can book a meeting with me or if your prefer it, you can also Get started with Bookkeepfix.
Extra recommendations and tips
Invoices and invoicing could be hard sometimes, eventhouh it looks like a simple process. For that reason, I will give you here briefly some other tips that you could use for having better results and improving your cashflow.
Accounting Software Tools
Although Excel or Google Sheets may be useful for your company's quick calculations, they should not be used to replace accounting software tools required for bookkeeping.
Standard Invoice Template
Create a standard invoice layout for your clients and staff. If you have no clue how to create an invoice and need it straight now. Click here to obtain your initial invoice template.
Track Invoices and Payments
When issuing invoices, please keep track of which invoices your customers have received and ensure that they were delivered to the appropriate division or person. This will allow you to simply collect the funds on these invoices as needed.
Payment options
Have you favorite method of collecting money from your consumers, but at the same time, open the doors to having several payment alternatives that will prevent any sort of excuse when customers are not willing to pay on time.
Review And optimize
Always take a time, at least everysingle 6 months to revise what is working and what is not from your invoice information. Also it is important to ask your customers their opinion about the information that they are getting from the invoice.
Use Bookkeepfix as your preferred Accounting Partner
It's possible that this invoicing stuff is tedious, frustrating, and causes you to lose money every day. If you need assistance with your invoices or billing process, please contact us to resolve your issues. :)
For now, scroll down to download your Invoice Template for free.
Thanks a lot for reading this post.
Invoice Template Download
The simplest method to have your invoice ready and completed. Please download your invoice template here.
