Cash flow is one of the biggest challenges for new companies to succeed. If the customer does not pay his invoices on time, cash flow can be preserved. So even though you cannot always guarantee that a customer pays early, you can prevent billing errors that will surely result in late payment.
If you are a new SME owner, you may not know how important it is to receive payment. Here are five invoicing errors made and how to avoid new business owners.
Waiting for an invoice
It should not be said that it is clearly a mistake that you forget to submit the invoice. Perhaps you’ll never be paid if you don’t submit your invoice.
The big mistake which is most common is that the delay in sending the invoice which can cause them to forget to send the invoice.
Perhaps you think it would be better to wait until the end of the month or send all the bills together on the afternoon of Friday. The truth is, however, that this tactic can lead to endless delays in getting paid.
In general, the sooner you send the invoice, the sooner it gets paid, the less likely it is to be overlooked to send. Consider it your policy for new or single customers to send an invoice soon after the work has been completed.
Failure to sign a preliminary contract
New businesses are often in the process of entering into an agreement with a new customer so that before signing a contract, they can begin a project.
But a handshake agreement won’t do it: You should set the parameters for your project by a contract to make sure the customer pays for it regardless of a change of heart. You can also select payment terms and specify a rate from this opportunity.
Asking a customer to sign a contract is not uncomfortable or a deal-breaker, and any customer who refuses to do so is certainly not someone you want to do long-term business with.
Not automating their invoices
Usually, if you can automate a process, you should. No exception is invoicing.
If you use streaming services like Netflix or Spotify, you may be familiar with this model. Such companies know that, if they are able to automatically charge their credit card information every month instead of demanding access to their services, they will be simpler for the customer (and for them).
For customers who frequently use your services, please allow them to set up an electronic invoicing system, where they periodically charge for your services. It’s a relief to know that your money will arrive simultaneously in your bank account each month.
4. Omitting important details
The facts are not just a document you are asking for money. You have to contain certain information on each invoice in order to avoid blends, misunderstandings or mistakes on behalf of your customer, or anybody involved in this process.
As a guide, ensure the following:
- The legal name of your company and the number of your office address
- Name of the customer and the address Invoice amount
- Payment due date
- Required Item list of products or services you offer
- Applicable tax numbers.
In recent years new forms of Income Tax relief have been introduced, to encourage the young entrepreneur.
5. Not using digital services
If you still send invoices using a paper-based system, stop. You can send invoices with plenty of excellent digital tools.
It not only saves you money on postage and office supplies by mailing your invoices, but it will also make monitoring their progress infinitely easier.
- This month, did you send out your invoice?
- Has the customer got this?
- If so, did they receive any notices of payment?
- Have your own records in your cloud with a backup invoice?
The answer to all questions above could be “Maybe,” “I have no idea,” or indeed “Nope” if you don’t digitally track the invoices.
There are many Invoice software providing facilities of the invoicing system through which you’ll be on the safe side of losing and forgetting any invoice. These tools help entrepreneurs by giving invoicing and billing solutions including business expense management tools. Cloudbooksapp is one of the best invoice software.