In order to get paid in time, you must have an efficient invoice process to ensure invoices are generated and submitted as soon as possible after goods have been delivered, or services have been rendered. It is also vital that all information on invoices is accurate and display everything to a customer who needs to pay. Inaccurate information leads to invoice queries which lead to payment delays. Below are some common invoicing mistakes that should be avoided:
Vague description of the product or service
It’s important to communicate with your customer in order to provide a thorough description of products or services. Make sure to describe the different items so your clients can keep track of what they are paying for, and so they can understand the invoice. This will lead to fewer questions about the invoice.
Not mentioning customer’s order reference or PO number
Mentioning customer PO number in invoice ensures that your invoice gets processed as quickly as possible. PO number also helps minimize the risk of incorrect payments by ensuring that deliveries and invoices have a corresponding reference number.
Forgetting payment details on the invoice
When your customer receives your invoice, the end goal is for them to pay you for the product or service you provided. If you don’t provide banking details or another payment method, you make payment difficult.
Not offering multiple payment options
If you want to get paid on time, then you need to make is as easy as possible for your clients and customers to pay you. Consider using a variety of payment options from credit card processing, to direct bank deposits and checks.
Due date not being spelt out
Sending out your invoice “on time” is almost meaningless if you don’t tell your client when you expect to be paid by. Never send out an open-ended invoice. Clients tend to delay payments when they learn that there is no due date on the invoice.
Errors in the customer information
Mistakes in the name or details of your customer can be sensitive and this would be a disaster in terms of disbursal of payment and the relationship with the client. Your customer might also experience issues with tax reporting if details are incorrect. Concerned person name, email id, phone no. should be there in every invoice.
Statutory requirement not correct/incomplete
In the case of not complying with statutory requirements, incorrect tax rate or calculation, there’s always a bit more stress since this relates to the already inconvenient filing process. It’s therefore important to always select the correct tax rate, calculate exactly and complying with all statutory requirements.
Including unexplained fees
If you have additional charges that were not discussed in your quotations, try to get approval via email so that you have a paper trail. Any unexplained fee in the invoice may result in further negotiation and revision of invoice.
Incorrect invoice number
A solid invoice numbering system must be decided upon as soon as you start invoicing. Each invoice must then have its own unique number and each subsequent invoice should have a number that progresses sequentially.
Poor formatting or editing
Spelling errors, incorrect currency and amount, and generic formatting can make your business look unprofessional. This can prevent you from receiving the correct payment on time.
Sending invoices without relevant supporting documents
Make sure to attach all relevant supporting documents copy with invoice to get paid in time. Supporting documents may include packaging list, shipping documents, certificate of origin, transporter POD, exchange rate, quotations etc. Also it is crucial to check the supporting documents to contain all required information.
Sending invoices to the wrong person or department
Make sure that you are sending invoices to the right person or department. Failing to do so will slow down the payment process. This usually happens when billing to large companies. Get an understanding of who is responsible for payments and send the invoice directly to them. Make sure to direct any communication regarding payment to that specific person or department.
Not backing up invoices
Like all of your other vital documents, make sure that your invoices are backed-up and stored on the cloud so that they can be easily retrieved. Most invoicing software systems do this automatically for you.
Not sending invoice consistently/Delay in sending the invoices
Don’t wait for your customers to ask for the invoice. The sooner you send that invoice, the earlier you’ll get paid. So send your invoice to customer promptly once your work is complete.
Covering letter not attached to invoices
In case, sending bulk invoices in one lot to the customer or single invoice against multiple quotes, covering letter should be attached to them. Covering letter should contain detail about no. of invoices, customer name and address, concern person name and contact no., invoice no., invoice date, invoice amount, payment due date and any other basic details. A cover letter will not just repeat your invoice in a shorter form but it will increase your chance of being paid in time and also help you in case any invoice in the lot is missing.
Not maintaining invoice dispatch tracker
Maintaining invoice dispatch tracker will help you in case of missing invoices as well as invoices delivered to wrong person at customer end. It will also make sure all invoices being delivered to customer at time.
Emailing the customer once the invoice has been delivered
It is always advisable to email the customer once the invoice has been delivered to them. It will make sure the submission of invoice to concern person.
Not having an efficient invoicing process
Manual process of invoices presents a number of challenges that result in unnecessary cost and delay in payment remittance. Having an efficient invoicing process will speed up the payment process since invoices are sent and received electronically and it’s easier to track and manage your invoices.
Other Issues
Apart from the mistakes listed above there are some other common issues which may cause delay in payment and should be avoided while sending the invoice to customers. These issues may include
- Undated invoices
- Unsigned invoices
- Period of services not mentioned
- Company logo missing
- Bad print quality
- Use of poor courier services