10 Effective tips for better invoicing

Posted on 23 Feb 2016 10:10 in Small Business Hacks
by Harish Rajora

An invoice is a commercial document issued by a seller to the buyer. An invoice is needed in almost every trade you do. This blog will discuss 10 effective invoicing tips for better invoicing and cash flow for your small business.

An invoice is a commercial document issued by a seller to the buyer. An invoice is needed in almost every trade you do. Whether it be ordering a pizza or buying a house, an invoice is what you require that shows that you have made a transaction. It is the most important part of any business. The invoice pattern and its design are unique for every company, but this blog discusses some of the most important things required to maintain the cash flow.


1. Itemize the contents
A customer can doubt the amount stated in the invoice as agreed with the seller due to some taxes etc. He can doubt the authenticity of the invoice. The seller should, therefore, itemize the content in the invoice. Itemizing means that everything for which the customer has been charged should be stated separately and clearly so that customer feels satisfied. For instance, you are delivering your product to the customer and according to your policy, you charge extra delivery amount in the customer's area. This should be well stated in the invoice so that the customer can see clearly for what he is paying and how much he is paying.


2. Use easy language 
Invoices are delivered to customers. These customers may or may not belong to the business class. Therefore, the language of the invoice should be easily understandable by every customer because it will be very hard to understand some words or complex notations as they are only used in the business field. For example, net 30 should not be mentioned in the invoice as it will confuse the customer whereas payment due within 30 days is easy and understandable.


3. Terms should clearly be described
Invoices state the terms and conditions to which the seller and buyer agreed before making a deal such as payment and delivery terms. These terms and condition should be clearly be described in the invoice. The buyer can decline the payment afterward for any of the terms and conditions for which he believes never existed before. Therefore, it is always advised not to use fine prints in the terms and conditions. The print should be easily readable by the naked eye so that customer does not miss any point.


4. Include incentives
While generating an invoice the seller can include incentives for the buyer so that buyer feels special or feels motivated to pay earlier than the deadline. For example, if a seller includes in the invoice that there will be a discount for the payment made before 5 days of the deadline, then this will attract the buyer and will motivate him to pay the dues earlier than what he would have paid without incentives.


5. Include Electronic Payment Method
A customer can pay his dues through checks or cash, but this method of payment is a little messy for the customer and time taking also. You can make it simple by including electronic payment methods such as Credit or Debit Card payments or wire transfer using net banking other methods like Paypal electronic valets are also popular and acceptable. By adding electronic methods, the customer can pay immediately after receiving the invoice avoiding any hindrance in the cash flow process.


6. Automate the process
Generating and arranging invoices can be a little hectic in a small business because there is no accountant or separate invoice generator for generating invoices. This can lead to a delay in delivering the invoices and frustrate the customer. This can be avoided by including the automated process for generating the invoices. This method reduces the human errors and saves money too. The invoicing costs are reduced from 40% to 70%. There are a very easy to use and simple invoicing software available such as Shimbi Invoice by ShimBi Labs.


7. Follow-up
Sometimes the customer can forget to pay his dues due to his hectic schedule, unintentionally, though, and can generate problems for the seller. But what if the customer gets regular reminders for the payment? Regular reminders remind the customer about his dues. This facilitates the process of cash flow, and the payments are made well before time. Shimbi Invoice like cloud-based invoicing software provides automated reminder settings, which make the task very easy for the seller too.


8. Handle late payments
Cash flow is the lifeblood of any company. This can never be ignored and should be properly maintained and modified for better cash flow. The inclusion of fines on late payments in the invoice can facilitate this process. If there is no fine imposed on the customer for paying late than the due date, then the customer simply ignores the invoice, and your invoice will be just another paper in a pile. Including the late payment penalties makes the customer pay very early because no one wants to pay more for something that he could have got for less.


9. Payment Query
Accurate delivery of the invoice is very important for the seller. The invoice should be delivered as soon as the product or service is delivered or a deal is made. Delay in the invoicing has its own disadvantages. The customer can make several excuses like he changed his address or he can also say that he never got the invoice. Delivering invoices on time makes it very hard for the customers to make excuses. After the delivery of the invoice, the seller should also call for the same, confirming the delivery of the invoice and reminding the customer very politely that the payment is due by this date.


10. Backup your invoice
A proper record is very much needed to be with the seller for any further complications that may come between the seller and the buyer. The buyer can even make false accusations on the seller for any reasons. Backup invoices are also needed if the seller is required to show the proper transactions and deals that he has done in the past to tax office. Backup invoices will be served as proofs in future.


Invoices are a major part of the cash flow process in any small business. Follow the steps above and make your invoices better than ever. A better invoice equals more customer. More customers equal more revenue. More revenue equals the architect of your dream.


About the author

Harish Rajora  
I love writing and reading

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