If you’re new to invoicing, you may assume that’s simple and straightforward. Just send a client or customer a piece of paper asking for money. Easy, right? The truth is, invoicing is a little more complex than that. One little mishap could prevent the bill from being paid by the due date. Even more detrimental, these mistakes could harm your reputation so much that you’ll lose out on repeat customers or referrals.
Invoicing Mistakes That are Costing You a Lot of Money
To ensure that you always get paid on time, and keep more money flowing into your business, here are 10 invoicing mistakes that you can’t afford to make.
1. Waiting or forgetting to invoice.
The sooner you invoice, the sooner you’ll get paid. It’s that simple. After all, money isn’t going to just magically appear in your banking account. However, one of the biggest of the 10 invoice mistakes is waiting to invoice. Most often, you forget to get it done.
And, the longer you wait to invoice, the less likely the bill will be paid. In fact, only 18 percent of invoices that have gone past within 90 days will get paid.
At the same time, I also understand that invoicing isn’t the most exciting of tasks. But, it’s a necessary evil if you want to be compensated for the products or services you sold. How else will you keep cash flowing into your business?
Make it a point to send an invoice immediately following the completion of the job. However, if you’re sending out multiple invoices per week, it’s probably a better move to set aside a specific day to handle all of your invoicing. Believe it or not, invoices sent on weekends are generally paid within 29 days, a full 10 days faster than invoices sent on Tuesdays, Thursdays, and Fridays.
If you bill monthly, you should issue invoices on the 1st of the month as opposed to the end of the month.
Finally, if you’re creating the same invoice, for the same client each month then you’re better off finding an invoicing platform that allows you to create recurring invoices.
2. Forgetting to include due dates.
Did you know that you’re eight times more likely to be paid on time if you include a due date on your invoice?
This may seem like one of many innocent invoicing mistakes, but as you can see, it can be costly. Always make sure that you include a day on your invoices so that it triggers a sense of urgency for the recipient. Preferably, it should be an exact date, such as “Due on June 1.”
Bonus tip: Offer an incentive, like a five percent discount, if the bill is paid before the due date.
3. Not proofreading.
It’s definitely worth the extra couple of minutes to double-check your invoices. You want to check your spelling, linguistic use, and grammar. Most importantly, you want to be sure that the amounts are correct. This not only demonstrates your professionalism, it also guarantees that you’ll be paid the correct amount.
If applicable, avoid miscalculations involving taxes and fees. Forgetting or miscalculating these taxes or fees could result in you having to eat these costs if your client completes the payment.
4. Surprising your clients and customers.
Coming home to a surprise birthday party is an example of a good surprise. A bad example? Opening a bill and being charged more than you expected.
Prior to working with a client, it’s best that you go over any possible additional charges, like taxes or delivery costs. It probably won’t be an exact figure, but at least these charges won’t completely throw the customers off-guard.
If you do incur additional expenses while working with a client contact them and make sure that it’s alright to proceed. This way there aren’t any disputes when they review the bill and will pay it on time.
5. Lazy itemizing.
“All-in-one” can be great when it comes to printers or kitchen gadgets. But, not so much when it comes to invoicing.
If you send an invoice that contains several projects, tasks, or other items, then it wouldn’t make to just ask the other party to pay a lump sum without explanation. How can they be sure that they’re being charged appropriately? This is one of the biggest invoicing mistakes that can be avoided.
This may be time-consuming, but if you want to speed up the payment process, list every aspect of each project, with rates, fees, and/or expenses explicitly listed for each one. This way there aren’t any questions or concerns when they receive the invoice.
6. Not providing multiple payment options.
Customers demand a broad choice of payment options that are convenient and secure. Accommodate that demand by offering multiple payment options. This includes everything from credit cards to checks to eCash.
If you have international customers, then you should work with an invoicing platform that at least calculates the current conversion. However, with digital wallets, they can transfer funds cheaper and faster than ever before.
In short, having multiple payment options keeps your customers happy, while also guaranteeing that you’ll receive payments in a timely manner. And, in most cases, these payment options come with either no-or-minimal fees. That means you get to keep more of your hard-earned cash.
7. Being rude.
Being rude goes beyond this list of 10 invoicing mistakes. It’s just bad for business. It can even lead to the failure of your business. I mean why would anyone want to support a company that treats them poorly?
The same is true for your invoices. Instead of writing a passive-aggressive message, be polite. In fact, it’s been found that including phrases like“please pay your invoice within” or “thank you for your business” will increase the percentage of invoices being paid by more than five percent.
Moreover, take that mentality when following up on late payments. Instead of yelling at the customer and demanding immediate payment, be a professional. Inquire why they haven’t made a payment. If they’re having financial problems, work with them by offering a payment plan.
This doesn’t mean that you should be a pushover. It just means that you’ll get a lot further with customers if you follow the golden rule.
8. Sending your invoice to the wrong individual.
Even though you’ve been working with a specific individual doesn’t mean that they’ll be the one paying you. Before you send out an invoice, make sure that it goes to the right individual. This way it’s not being passed from one person to another.
Additionally, make sure that you’re sending the right invoice to the right customer. It would be embarrassing if you mixed-up bills. Even worse, it could mistakenly reveal private information about these customers. That’s just not bad for your reputation, it could also be a legal concern.
9. Not branding your invoices.
As a business owner, you should seize every opportunity possible to brand your business. And, yes, this includes your invoices.
Your invoices should always be your logo, along with the fonts and colors that mirror your business across every channel. While you should remain a professional, you can also demonstrate your creativity or personality in your invoices. For example, if you’re in a creative industry, don’t be afraid to create an invoice template that is more bold or quirky.
Another way to build your brand through invoices is by highlighting the other products or services you offer. This can be through the inclusion of a brochure, catalog, or giving your customers to try out a new product/service before its release. It’s a tried and true way to encourage repeat customers.
10. Still relying on paper.
Creating and sending paper invoices is an outdated practice that slows down the entire payment process. That’s because by the time you mail the invoice, wait for its return, and then deposit it in your bank, it could weeks to get paid.
Rather, you could use online invoicing where you can send an invoice and receive a payment on the same day. Again, that will get coming into your business faster.
Paper invoicing comes with additional costs like paper, ink, and postage. Ultimately, you could be spending anywhere from $3 to $8 per piece of mail if you’re still using paper-based invoicing. Electronic invoicing typically costs well under a dollar. This is a simple way to save money online.
Stop Making These 10 Invoicing Mistakes
You can stop these 10 invoicing mistakes right now and start realizing a better cash flow and improved client relationships.