Figuring Out an Invoicing Process Could Reduce Headaches

Better invoicing practices can improve cash flow and relationships with customers

Figuring Out an Invoicing Process Could Reduce Headaches

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I recently discovered a longtime client was two invoices behind in paying me. This had never happened with this particular company before, so I shot off a quick email to the office manager asking if those invoices had been paid. Because, to be honest, usually when I think a client has missed a payment, it’s an error on my part and I just forgot to enter the payment into my accounting software before depositing the check or the check got buried under a pile of papers on my desk. (Don’t judge. This article's theme is not office tidiness.)

The other common scenario is that on the very day I get around to asking a client if they’ve paid an overdue invoice, the check magically appears in my mailbox and I have to send an embarrassing “Never mind, I got it” email. In the recent case, however, it was not my mistake. The checks weren’t on my desk or in the mail that day.

My mistake wasn’t in the asking, but rather the person I chose to ask. I got a tersely worded reply to my inquiry saying that the checks would be mailed that day and it wouldn’t happen again, but if it did, I should ask her — the owner of the company — because she handles the finances.

Suddenly I felt like I was in the middle of some office politics. The business owner didn’t want the office manager to know something — either that she was behind in paying the bills or that she suffered a memory lapse. Anyway, it got me thinking about my invoicing procedures and wondering if I’m doing everything I can to speed up the process of getting paid. Here are some invoicing best practices I found to both adopt and share:

Determine who cuts the check

In the scenario above, it would have been helpful for me to know who actually processes my invoices. Then I could have asked her directly about the missing payments and the awkwardness would have been avoided.

It can also help to know who cuts the checks so that you can occasionally thank that person by name. If you take the time to get to know the person who handles your invoices, your invoice might mysteriously float to the top of the pile when that person is paying bills in the future. Honestly, haven’t you made people who you like or companies that have treated you well a priority over nameless, faceless payees when you’ve had a stack of bills to deal with?

Invoice faster

You’ve got to make invoicing a priority, no matter how busy you are with other tasks. Not taking time to send invoices will disrupt cash flow, and not having cash flow can hurt, or kill, a company — even a busy one. For jobs completed in a short time frame like an emergency repair bill immediately. For ongoing jobs, send invoices in frequent, regular intervals. Not only will this maintain your cash flow, but customers are also less likely to question several small invoices than one huge invoice at the end of a long, ongoing project.

Know the basics

I thought anyone in business knew what to put on an invoice, but then I received one from a so-called professional that was handwritten on a piece of lined paper torn out of a child’s school notebook that didn’t even have the name of the business on it. So I’ll get down to basics. 

Make sure you include the date and the name and address of your business, as well as your name, phone number and email address so the recipient can contact you if they have questions. Also, include your company’s invoice or job number, whom the check should be made out to, a detailed explanation of charges (more below), the total amount due, your payment terms (payable upon receipt or payable in 30 days, etc.), and a brief thank-you message. Also include a purchase order (PO) number or vendor number if the company supplied one to you. And while I don’t put my tax number on the invoice for the world to see (or steal), if it’s a new client, I make sure to call and provide them with that and any other information they need to set me up as a vendor.

Introduce yourself

As I said earlier, if the person processing the invoices knows you, you might get paid faster. With a new client, ask for their name, phone number, and email address. This will prove helpful if you ever have questions regarding outstanding invoices. That initial call to get set up as a vendor is a great time to get this information. 

You might also benefit from asking the person who pays you if there’s anything you can do to make their job easier. Does it matter to them, for example, if the invoice is an emailed PDF, a Microsoft Word document, or (gasp) printed out and snail mailed? Is there a vendor or PO number you should include? If it’s a big company, ask if they would prefer to pay electronically, which would be efficient for both of you. Also, to help you stay organized, ask them to include your invoice numbers on the checks if they are not already doing that. This is especially helpful if you are sending a partial bill for an ongoing job.

Stay on top of things

Most companies have a predictable payment schedule. Don’t be afraid to politely question if a payment is later than usual. It’s usually an easily correctable oversight. But also watch for subtle changes in how quickly you are paid. If a client pays immediately the first time, but gets slower and slower with each subsequent invoice, it could be a sign of trouble. Or, it could simply mean that they’ve hired a new accounts payable person or any number of other scenarios. Don’t be accusatory. Simply ask if they have received your invoice and when you can expect to be paid.

Be nice, be precise

Make your invoices look professional and stand out. Make sure your company name is large and readable, and include your logo. Design or select a layout that is attractive and easy to read. And again, somewhere include a message thanking the recipient for the business. Accounting software and countless other applications are available for automating the invoicing process, and most allow you to customize invoices.

When it comes to invoice content, itemizing takes time but can help avoid misunderstandings with clients about what they are being charged for. Seeing details in black and white can eliminate their need to call and ask questions, thus getting you paid in a timelier manner.

Look at the invoice as an opportunity to let clients know just how much bang they are getting for their buck. Do this by explaining every charge on your invoice and using language anyone would understand, rather than industry or business jargon.

Do it well

Remember, you are in business for no other reason than to make money. To do that, you’ve got to invoice your customers. There’s no way around it. It can be considered the single most important thing you do. So do it well.



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