By Trace Reddick, MBA,
According to a HubSpot survey, 27% of SMBs have a hard time with creating and sending invoices. 46% of those SMBs surveyed said they have issues with getting paid on time.
So if you are one of those small to midsized business owners or managers having headaches from unpaid invoices, you’re not alone.
We all want to make sure we are fairly compensated and we all want to maintain our B2B relationships, so let’s go over the common mistakes with invoicing and how to fix them.
Sending the Invoice to the Wrong Person
Your point of contact when making the sale or processing orders isn’t necessarily the one who writes the checks.
The person you send it to should forward it to the right person. Don’t assume they will forward it in a timely way as making sure you get paid isn’t their responsibility. Sending it directly to the person who pays saves time for you and your customer.
When completing a transaction with a customer, make sure you at least get the full name of the person who makes the payments. Then pursue the contact information for this person: payment address, phone number, email address, etc.
Poorly Written Invoices
An invoice that is unclear or makes the reader have to hunt for information may be put to the side. That could mean that the other invoices are now in line ahead of yours and get paid first.
Make sure it’s clear who it’s from and what it’s for. Clearly state the deliverables and annotate any anomalies. Be detailed.
Tips:
- An invoice with a logo is 3x more likely to get paid.
- Making sure your invoice format isn’t way different from how others are doing it also makes it easier for the payer to read it.
Standard Invoice Contents – Include the Following:
- Your legal business name (and number, if applicable).
- Your legal business address (payment address if different).
- Your contact phone number, email address & AR point of contact.
- Payer’s business name & address (address to the attention of the point of contact for payment).
- Invoice number (if applicable).
- Date of the invoice.
- Payment due date.
- Tax numbers (when necessary).
- Statement of payment terms (if set).
- Detailed & itemized lists of deliverables.
A complete and easy to read invoice is fundamental for payment efficiency.
Lack of Follow Through
It’s probably not a fun thing to do, but it’s necessary to follow up on invoices. Make sure you to confirm that your invoice was received.
Received doesn’t mean it was read. Ask about the review status and if they have any problems or questions with the invoice. Lastly, ask when you can expect payment and by what method. This will give you a chance to clear up any possible payment method issues.
Set reminders or designate a day of the week to follow up on unpaid or late invoices. Be diligent. It’s simply good communication to follow up and it could also keep your invoice top of mind.
Invoice Discrepancy
Amounts on requisition and amounts charged to the customer need to match, with purchase orders in particular. Your customer may not pay if your information doesn’t match.
Making sure that the numbers are right will avoid a reason for a delay in payment.
Lack of Documentation
Your customer may ask for proof of services rendered. If it’s something you expect them to ask for, go ahead and include it with the invoice. Some businesses may require several documents. Make sure you understand and follow their protocol exactly.
Provide everything they need to process your invoice so it’s right in front of them. Sending complete paperwork saves them time and gets you paid sooner.
Not Being Flexible Enough
“Visa. It’s everywhere you want to be,” was the boast that pointed out American Express’s limited acceptance. Several more new payment options have been added like Google Pay, Apple Pay, PayPal Zelle, etc.
Being accommodating with how your customers pay makes it easier for them, so look into offering more payment method options.
Being Too Flexible
Giving someone a long time to pay may mean you wait that long to get paid, or worse, forgotten about.
The standard turnaround time on an invoice is 30 days, but it’s your prerogative to make the due date sooner (if you think your customers will be amenable to this).
Be explicit on your expectations for payment due, and only give more time when necessary.
Remember to call Dorado Finance if special circumstances with a customer are keeping you from much-needed funds. We can get that invoice paid quickly.
The Takeaway
Streamlining procedure and following best practices in invoicing is a value-add for you and your customers. It strengthens your relationship with a show of good customer service and eliminates reasons for delays.
Assess your invoicing practices. Identify trends and recurring issues that cause payments to be missed or not paid on time. Rectifying these problems will save you time and stress. What’s more, it keeps the cash flowing. Be proactive!