Business invoicing plays a crucial role in the growth and development of SME India. Not only do invoices directly indicate the financial health of an organisation, but they are also a legal paper trail of the business earned.
To ensure that your invoice clearly delivers information to your client, it is important that it has all the small bits of important information that a bill needs in order to be paid.
Apart from this, it is also vital to set your terms beforehand, such as discounts for timely payments or penalty for late ones, so as to ensure efficient business invoicing. It is important to make sure your invoice reaches the client in a documented format, as per schedule.
Besides the basics, it is equally important to incorporate the following three components to your invoicing process:
#1 Optimise your invoice terms
Optimising your business terms can be beneficial for your business invoicing. This can be done by simplifying the language that you use in your invoice and making sure you state definite timelines, dates and amounts. You could also avoid some terms that may hit the client as ‘hard’ and stick to a professional tone.
An invoice should have all the details that a client needs to process your payments at the earliest.
- Employer Identification Number (EIN) or Tax ID Number
- Unique Vendor ID
- Names and addresses of both client and contractor
- Due dates and penalty dates
- Clear and itemised list of services rendered
- The total amount owed
- The terms of the invoice
Simplifying your invoicing can help your clients gauge what you expect from them after receiving the invoice and can help ensure
better, timely payments.
#2 Late payment fees
Your client may not be in a hurry to pay you until you levy a late payment fees clause in your contract. Setting your payments terms in beneficial for both parties. You might offer a 1-2% discount for invoices paid within 15 days; similarly, you might penalise late payments. This information should be included on the invoice itself. This practice can encourage your clients to pay faster and regularise your cash flow.
Timelines in a business are important. A payment forecast allows you to plan newer opportunities and sort out your sustenance issues. Once you submit your invoice to the client, make sure you send in a reminder on the last 6th day and the last 3rd day. This proactive approach is just to make sure that a busy client does not forget to clear your dues.
Armed with these effective invoicing tips, you are sure to better your payment cycle and achieve a stabilised cash flow for your business.