Businesses are often guilty of making four mistakes when it comes to the invoices they’re issuing. Some of these mistakes are small and easily avoided; however, some are larger and can negatively affect the business as a whole.
These mistakes can be easily avoided when using QuickFile to handle your invoicing. However, you have to know what the mistakes are and how they can creep into your processes before you can put fixes in place to avoid them.
1. Not including payment terms
If you don’t specify to your clients when you expect to be paid, how will they know when to pay you?
While you might have a contract in place that specifies that you expect payment in 7 days, if you don’t specify this on the invoice, your client might not know. This can happen in cases where a specific department signs the contract and a separate department handles invoices. You can’t be sure that they will communicate the invoice terms to each other.
To avoid this, you should state your payment terms on the invoice.
Within QuickFile, we make this easy by allowing you to set the default payment terms at an account level in the invoice customisation area of your account settings. Alternatively, if you have a few clients for whom you would like to have different terms, you can change them on a client-by-client basis.
What should your payment terms be?
There’s no right or wrong answer here, depending on how your business operates. Typically, businesses set their payment terms as 7, 10, 14, or 30 days; this means that once the client has received the invoice, they have until the specified payment term to pay you the amount due.
While you might think you’re being kind by allowing your clients 30 days to pay you, you need to consider how this will affect your business and how you operate. If you have bills due in this time period from your suppliers, will you be able to afford them?
2. Not specifying the payment method
Have you considered all the different payment methods and whether your business can accept them? If a client turns up at your door attempting to pay in cash, would you be able to accept it from them, or would you have to turn them away?
If you’re clear with your clients about the payment methods you accept, you can avoid situations such as these.
Within QuickFile, there are two ways you can let your clients know which payment methods you can accept.
- If you accept online payments, you can define these at an account level, then if the client wants to pay online, they are only shown the methods that you accept. For example, if you accept payments via PayPal and have your PayPal account connected to your QuickFile account, your clients can pay you via PayPal straight from the invoice.
- If you accept payment via bank transfer or cheque, you can give your clients the details in the footnotes section of the invoice. You can even make them bold so they stand out from the rest of the information there.
3. Not sending invoices in a timely manner
This will depend on how your business works, whether you invoice upfront or after work has been completed. However, you need to remember that your client should receive the invoice when they expect you to send it.
If they expect you to send it after completion of the work, but you send it before, they’re unlikely to pay until they have received the completed work. However, if your payment terms state that you expect payment the next working day, this can cause a conflict in expectations.
Similarly, if you forget to invoice your client at all, don’t expect them to be upfront and honest about the mistake, after all, they’ve now had free work from you.
Using Estimates within QuickFile lets you see which estimates have been accepted, declined, and converted into invoices, which can help you keep track of when you should be sending your invoices.
4. Not following up on invoices
Once you’ve invoiced your client and notified them of your payment terms, they know when you’re expecting to be paid. But what happens if they don’t pay when you’re expecting it?
The first step is to make the client aware that they’ve not paid you on time and that if they continue to withhold payment, you may have to charge interest on the balance due.
QuickFile can help you with this by sending automatic reminders once an invoice becomes overdue, with periodic reminders sent afterwards.