A recent study shows that small businesses in the UK suffer from £7.4 billion ($9.25 billion) in unpaid invoices.
The reasons for this loss can be many,
• Badly designed invoice.
• Unstructured invoice.
• Errors in the details.
Whatever the reason, small businesses suffer huge financial losses that can break the bank. But don’t worry, just follow a few little invoicing tips that will always benefit you and save you from financial losses. Let’s get started with the basics.
What is an Invoice?
As a business person, you have to issue invoices when you sell products or services. You also receive invoices from your suppliers when you buy items from them. The invoice is therefore a commercial document that is prepared when a sale is made and must contain all the information about that sale.
The invoices that companies receive (expenses) can arise from a wide range of products and services purchased: technology, equipment maintenance, travel or events, among others.
The invoice must comply with the statutory content, which is as follows:
• Invoice number.
• Business name of the buyer and seller.
• GST of buyer and seller.
• Invoice generation date.
• Description of the good or service sold.
• Price per unit and price before taxes.
• Discount, if applicable.
• The total amount with all taxes.
Please note that the return fee, if applicable, must be specified.
And now we come to our main topic: 7 invoicing tips and advice to keep your finances under control.
7 Invoicing Tips to Manage Invoices in Your Company Correctly?
Correctly managing your small business invoices, especially those that correspond to expenses, will help you control the accounting and its associated costs. These are some keys to effective electronic and non-electronic invoice management:
1. Analyse Your Invoice Management Process
The first invoicing tip you should follow is to thoroughly analyse all stages of your company’s billing process to identify:
• Common mistakes.
• Duplication of tasks.
• Time invested in each invoice.
• Phases that are not necessary.
• People involved in management.
• Bottlenecks that slow down the process.
• Essential tasks to complete the management of each invoice.
2. Use Invoice Management System or Billing Software
Invoice management software allows you to automate various tasks, such as digitising invoices, monitoring payments, validating each invoice, or generating periodic reports.
To perform these tasks accurately, the software must have seamless integration capabilities with other business systems, such as the ERP or accounting system.
3. Create an Invoice Management Process
You need to identify the steps that ensure the correct management of each invoice. For example, the steps may be as follows:
• The team receives the invoice and enters it into an Invoice Management System or Billing Software.
• The team checks the invoice to ensure its accuracy, matches it with a purchase order, and then validates it.
• Then, payment is made within the agreed-upon period.
• Finally, the team keeps each invoice for tax filing.
To make the invoice management process more effective, it should include deadlines for each step, payment and collection methods, and return policies.
4. Create an Appropriate Billing Calendar for Cash Flow
The best way to manage invoices for small businesses is to use a calendar to plan each event. One of the most effective invoicing tips.
Specialised software makes it easy to set alarms and complete tasks. Similarly, a payment plan allows you to view and plan for the future based on expected income. You can also set billing schedules and periodic payments at fixed intervals.
Moreover, the shared calendar allows you to present updated information to the entire accounting team, facilitating coordination and ensuring that tasks are completed as planned. In this way, each member of the department has clearly defined priorities and roles, bounded by a specific time frame.
5. Keep a Record of Invoices Issued and Received
This invoicing tip may seem boring and unnecessary, but we can tell you personally that it is useful.
People usually put all the invoices in an envelope or a plastic bag and keep them until the time comes to file their tax returns. When the time comes, it is torture to have to organise the invoices, prepare the book of issued and received invoices, etc., and you regret it; why didn’t I do it little by little, every week or every few days?
Well, that is exactly why it has to be done! It is as simple as preparing an Excel sheet with the basic data of the invoices. It will be very easy for you to check the total at the end of the quarter and prepare the statements.
6. Review Invoices
Before you send an invoice, make sure it meets all the requirements. Check for the correct total amount, date of update, invoice number, and GST number.
In a small business, a simple discussion and correction may be sufficient, but in a multinational company, changing an invoice can be an arduous process. Spend a few minutes checking it before you send it, and you won’t waste time trying to correct the error!
7. Always Send Your Invoices in PDF
Last but not least, when sending an invoice, the worst thing you can do is to send it in Word or Excel format. Anyone can modify and alter the invoice without your consent. If you send it in PDF format, they can still do the same, modify it, and even falsify it, but the risk is greater if you send it in an editable format. Why take the risk?
3 Recommendations on Invoice Management System & Billing Software
With all the above invoicing tips to help small businesses manage invoices properly, take a look at our 3 recommendations for invoicing software.
ProfitBooks Invoicing Software
It is a free invoicing software that includes functionalities such as e-invoicing, accounting, inventory management and more. ProfitBooks Invoices automatically accounts for tickets and invoices, manages customers and suppliers, and controls cash flow.
• 100% Free: A powerful billing system that helps you create professional invoices and record expenses for free.
• Receive Online Payments: Ability to accept payments from your customers by credit card, debit card, net banking, or even wallet.
• Customise Your Invoice As Per Your Branding: Added different invoice templates with the ability to upload the company logo, show/hide items, and change column names.
NYGGS Invoice Management System
NYGGS provides invoicing and billing software specifically for construction companies. Project Management Software provides tools for billing, accounting, project management, inventory, and more. Further, it allows you to create and send invoices, automate accounting processes, and generate financial reports.
• Invoices in the Cloud: NYGGS provides the most secure database to store all your documents, including invoices, in the cloud.
• Schedule Recurring Invoices: Do you have clients that you invoice every month? This billing app provides features to schedule all the invoices with a few clicks.
• Integration Capability: It also integrates with many other applications, so you can centralise the management of your business on a single platform.
SumUp Invoices
It is an online invoicing software designed specifically for freelancers and small businesses. It allows you to create and send professional invoices, manage clients and products, track payments and keep track of expenses.
SumUp Invoices also offers different pricing plans, but you can start for free as a sign-up bonus. Pricing includes a free version with basic features and monthly or annual payment plans with additional features such as recurring billing, quotes and premium support.
Conclusion
Getting invoicing right is an essential part of running your business efficiently. By following these invoicing tips and taking advantage of automated invoicing software, you will be able to issue accurate invoices and comply with legal requirements, avoiding errors and future problems.
Remember to use efficient invoice management tools and maintain proper document organisation for a smoother workflow. Start following these tips to take your invoice control to the next level!
