Invoicing is a vital part of running any successful business, but it’s especially true for smaller businesses that have limited sources of cash flow. Invoicing allows you to track payments that are owed to you when they should be paid by and create a document trail in the case of a client defaulting on their payment. If utilized properly, it also serves as a further point to make a good impression with the client.
So what should you account for when creating invoices for your small business?
What to Consider When Invoicing
Before creating an invoice, you should have made good contact with your client. They should be aware that an invoice is coming as well as know-how they will receive it, via the mail or through digital means.
If there are any changes in prices, the client should also be made aware of this before they receive the invoice. Openly discuss the changes, why they were necessary and what services or goods they correspond to specifically.
This detailed information for services and goods should also be documented on their invoice to help your clients understand what they are being charged for. This information should be clearly laid out for easy readability. You should also place due dates prominently and ensure that they are correct, including the date of service and the date the payment is due.
Invoicing someone might feel pushy in the beginning, but most clients will expect a formal request for payment that outlines their charges. You’ve done work and you deserve to be paid for it.
To ensure that happens and that your client has a reasonable timeframe to send out payments, make sure that you are sending out the invoice in a timely manner.
Creating Invoices
At the top of your invoice, you should have all of the following information: Your business’ contact information so that your client can reach out to you with any questions about payments. You should also include a unique invoicing number to help you keep track of each invoice. Provide your tax ID number in case your client needs it for their own tax purposes. Including the recipient’s information is also standard practice.
For the payment section, you should include the payment due date, itemized and detailed list of charges, a tax line, and total payment due line. If you have a preferred payment method, you should include this information near the total amount due line.
At the bottom, it’s a good idea to add a personal message. It can be a ‘thank you’ message to your client or a business motto. You can also encourage them to reach out to you in case they have any questions or concerns.
Creating and sending invoices digitally helps keep information clean and secure, and creates a better trail in comparison to paper invoicing. It also helps you when tax season rolls around. However, it’s important to remember that not all customers will be comfortable with digital invoicing, especially older clients. Many software options allow you to invoice digitally as well as produce physical copies.
Once you’ve invoiced your client, it can be a good idea to follow up with them. Ensuring that they are happy with the final result and price tag can help with return business and word of mouth business.