Sales invoicing is vital whatever you are selling: you have to get your invoices out to customers in good time or face ongoing cashflow difficulties that could make you go bust.
We recently saw a business where, because of personnel changes, one month’s invoices to clients went out very late and they almost failed to be able to pay their staff at the end of the next month.
It seems that however well organised you are with sales invoicing, even a small glitch can have a disproportionate effect on cashflow. So, if sales invoicing is so important, what are the top five tips?
1. Get the basics right
Make sure your invoices are professional-looking, accurate (no surprises for the customer, errors can delay payment), sent to the right person, contain a Purchase Order number if required, have a unique reference number and are sent out in good time.
Get the basics right first time, every time.
2. How to create invoices
The best way is to create your invoices in your accounting software and email them directly to clients. The creation of the invoice does the accounting at the same time, so there’s no duplication of effort.
Some businesses still create their invoices in Word or Excel (of the two, Excel is better because it will add things up and calculate VAT properly). If you do this, convert them to PDF before sending them so they can’t be changed.
However you create your invoices, make sure the basics are right.
3. How to send invoices
Three options are most common:
- email the invoice as a PDF
- post the invoice
- send a URL link from where the client can download the invoice
Emailing the PDF stands out as the best of the three. There are no doubts that the invoice was sent and if it pings back then you know you need to send it to a correct address. Email your invoice to more than one person i.e. your contact and the client’s accounts payable department, which will help you to get paid.
Second-best, slower and more expensive is to send invoices by post. In the 21st century it’s difficult to understand why companies send invoices by post.
Even more difficult to understand is sending the URL link to your invoice but not the PDF. Sending the URL is simply creating a reason for your invoice not to be paid as it makes your customer have to do a bit more work which they won’t thank you for and might conveniently forget to do.
4. Make it easy to get paid on time
Your invoice should contain the details of how you want to be paid. This should be by BACS and therefore you MUST include your bank sort code and account number on the invoice. If your client is overseas, further details such as your IBAN will be required and part of getting the basics right will have been to use the correct currency for the invoice in the first place.
Every sales invoice is part of your credit control process and it must help, not hinder getting paid on time.
5. Systemise your sales invoicing process
Like many business processes, sales invoicing should be turned into a documented system that can be run in the same way every time and produce the same outputs. Make sure more than one person knows how to run the system so that holidays and staff changes don’t mean invoices are not produced.
Sales invoicing becomes more efficient, less prone to error and clients come to expect your invoices to arrive at the same time and in the same way each month, which helps you to get paid.
Where you send recurring invoices of the same amount to the same clients each month, use your accounting software to set up and email recurring transactions so the job is done for you and not overlooked.
Easy!
There’s no reason to be poor at sales invoicing – it just leaves you poor! Why not read more on our bookkeeping services for business and let us help you keep on top of your invoicing.
Michael
@diaryofanomb
Sales | Margins | Profit | Cashflow
