A place for startup entrepreneurs to meet in Pune
Invoices are a part and parcel of every business. They are crucial tools to convey the terms and details of the payment procedures to your clients. Even though invoicing seems simple and is done on a daily basis, the practice is not devoid of common mistakes. Even minute errors can give your creditors leverage to pay you late and cause your working capital to be under strain. Hence, you need to look out for these common invoicing mistakes that you might have been making all along –
1) Not Mentioning Due Dates
SMEs are so often plagued with this problem that it makes it the most common error on the list. If you don’t convey to your clients when you expect them to pay you, they may take forever to give your money back. You should always mention a specific due date to trigger a sense of urgency in your creditors. Instead of using the phrase “Due in X days”, use “Due on X date”. This will act as a hard deadline and motivate them to stick to it.
2) Including Un-discussed Additional Charges
This also comes under the list of top ways to lose your clients. If your client has no idea about an array of some additional charges (like taxes and delivery costs) that are applicable in your industry, it is your job to educate them about the same before you prepare the invoice. The best practice would be to list all the applicable charges in your policy details beforehand, and also as a ‘payment terms rider’ on all your invoices. This will make sure there is no clash of professional opinions nor can the bill be legally challenged by the client.
3) Not Following Up On Invoices
Once your invoices are sent out, not following up on them on a regular and professional basis may cause your clients to be sluggish about the payment process. With the help of innovative tools, you can automate the follow-up mechanism. SpiderG, India’s first e-invoicing platform, can help you out in the domain with its CashCal feature. The smartphone application sends out automated and scheduled reminders to your clients via emails and SMSes so that you don’t have to manually do the same for your whole creditor list.
4) Waiting Before Sending Out Invoices
The payment process does not start until your client receives the bill. Hence, if you do not invoice when the time is right, you would have to wait even longer to receive your money back. The best time to send out the invoice is as soon as the product is delivered or the service is provided. You would be shooting yourself in the foot if you wait out any longer.
5) Mixing Up Recipient Information
This problem often occurs while dealing with large companies having multiple departments. You may make the mistake of mailing the invoice to the company’s address, without mentioning the particular department or personnel to whom it is addressed to. This will further delay the payment process, or may even cause the invoice to be misplaced. To avoid this, get in touch with the client about all the details regarding whom the invoice should be addressed to.
Though the best way to avoid such goof-ups would be to switch to an e-invoicing software like SpiderG that can send out immediate invoices right in the account of the intended person.
6) Not Including Company Information And Logo
Distributing invoices is also a marketing opportunity since they would remind your clients time and again over the whole financial year about you and your business. They may even result in them referring you to other businesses. You should therefore always include your contact information along with your company’s logo so that the next time they are in need of the same work, your company is the first to come to their mind.
7) Failing To Itemize Costs
If your customers do not understand what they are paying for, this will harm your authenticity quotient in front of them.
Even if you charge hourly rates for intangible services, you should always provide them a proper cost break up about the same. On the other hand, tangible products can also be easily itemized based on per unit cost and total count.
8) Not Including Discounts Or Penalties
Customers who pay on time should be given incentives in the form of discounts to encourage them to keep doing so. Similarly, the ones who are late on their payments must be asked to cough up additional pay according to the levied penalty rules. Information regarding these should be included in the payment terms that are inscribed in every invoice.
There can be two ways to apply these. Either you can send an updated invoice on the day the client pays you, or you can apply the incentive or penalty amount in the next invoice you send them.
9) Not Keeping A Database Backup
Imagine losing all your stored invoices and data overnight due to some unforeseen events. Maybe you misplace things in your file cabinet, or your local computer crashes and causes the data to get corrupted. Whatever the case, you need to make sure that your database is protected at all times with proper backups. The best thing to do would be to use handy software like SpiderG which combines e-invoicing and cloud computing to secure your data over the network so that they can be easily accessed anytime and anywhere.
10) Not Giving Multiple Payment Options
This would depend on the demography of your clients. If your customers are sitting in a different state and you are giving them only the option of cheque payment, you are bound to wait for the cheque to reach you via mail. The best way would be to allow everyone to pay through online payment methods so that clients have the choice of paying you as soon as they receive your e-invoices. If you have not implemented the e-invoicing system yet, download the free SpiderG app today.
E-invoicing is revolutionizing the business and is the future of maintaining the invoice databases. SpiderG is India’s first e-invoicing platform that has a host of useful features to meet all your invoicing needs. You can download the app from the Google Play Store here.
You can read relevant posts and the original post here