Getting paid is essential for a healthy business but invoicing errors can sometimes create issues that hits your bank balance. If invoices remain outstanding for a long period, your bills may need paying before the cash is available to you.
Errors on paper invoices – which some SMEs still use – are easy to make. Invoicing using accountancy software, such as Xero, helps minimise mistakes. But there can still be errors if you’re not careful. Our tips will help you reduce invoicing errors so you’re paid on time.
Avoiding invoicing errors
One of the most surprising invoicing errors is getting your bank details wrong. It sounds simple, but hitting the wrong key on your keyboard will make the difference between getting paid on time or waiting for payment after the agreed term. Your client or customer will use the details you supply, so it is essential you make sure everything’s
OK when you set up invoices, especially if you switch banks.
What other ways can you make mistakes when invoicing?
Check the amount
This sounds obvious, but dealing with many clients and customers with different requirements means your invoice amounts are likely to be different. Check the price you quoted and ensure it matches the invoiced amount. Sending an invoice with the incorrect amount means you’ll need to issue a cancellation invoice. You will need to include this and the original invoice in your accounts. As well as extra effort, such an error delays payments.
Check payment terms
Your payment terms are often 7, 10 or 30 days, which means payment should be made by your client within the 7, 10 or 30 days of the invoice date.
Before agreeing payment terms, decide how quickly you’d like to be paid. Waiting 30 or 45 days for all payments can impact your cashflow. Making your terms 7 or 10 days will help that. Some clients may expect longer payment terms, so consider offering them a discount for early payment, as this can improve how quickly you are paid.
Payment method details
This may seem obvious, but stating how you want paying is essential. If you only accept BACS or card payments, specify it on your invoice. While cheques are rare these days, if your customer only finds your postal address it increases the likelihood of them paying that way.
Make it clear how you want paying to reduce the likelihood of hassle.
Remember, to double check your payment details, such as bank account numbers. Offering online payment gateways, such as Worldpay, is useful…but only if you provide the correct information.
Delays in invoicing
The quicker you invoice the quicker you’ll get paid. But some small business owners struggle to find time to sit down and carry out the job. Accountancy software makes life easier but if that still doesn’t help, consider a bookkeeper or accountancy company to look after your invoices. It will save you money in the long run.
Failing to follow up
Clients and customers are just as busy as you, and it’s easy to overlook an invoice. While emailing is a cost effective way to send invoices, spam filters may mean the invoice doesn’t hit their inbox.
So, if an invoice if overdue, get in touch to chase payment. You aren’t bothering anyone if chasing a payment because it’s just what you are owed. Be friendly when doing so as there could be a valid reason or a simple misunderstanding about the payment.
Failing to follow up on unpaid invoices means you’re missing out on money that could be helping the cashflow of your business.
If you find you’re having issues with invoices, contact our team today for advice.