As a small business or freelancer, invoicing can be one of those things you don’t really look forward to. Sure, the result of it is that you get paid, but the actual process itself represents non-billable time spent on admin. And there’s a lot to think about, so it’s no wonder that SMEs make mistakes when it comes to invoicing. Here are five of the most common errors – and solutions to make invoicing simpler and less time-consuming.
Mistake #1: Not invoicing at all
As a small business or freelancer, you have an obligation to keep your own financial records. Even if your client is fine with paying you informally via bank transfer without a statement of the work completed, it’s good to get into the habit of creating invoices, if only for your own records.
If you aren’t invoicing at all and aren’t getting paid, this can also have the same cash flow implications as late payment.
The solution: start invoicing
Create a basic invoice template and get into the habit of invoicing for any work you do. You can also use invoicing software, which does some of the manual stuff for you.
Mistake #2: Not invoicing on time
When running a business, you are constantly juggling different tasks. So it’s no wonder that from time to time you may forget to send your invoices on time. Unfortunately, sending an invoice late reduces your chances of getting paid on time. And late payment can make it difficult for you to know how your company is doing, or plan ahead for the future. They can also cause cash flow jams, which might mean that you in turn can’t afford to pay a supplier, or can’t make a crucial investment to grow your business as planned.
The solution: set time aside to invoice
Pick a specific time in the week or month that you dedicate to invoicing. Then, make sure you stick to it! As a small business or freelancer, it can be tempting to take on extra work instead. But if you aren’t disciplined about invoicing on time, you’ll put the sustainability of your business at risk.
Mistake #3: Forgetting to add important data
When you’re raising an invoice, there is important data that you need to include, such as:
- your company details
- your customer’s details
- a clear description of what you’re charging for
- the supply date
- the date of the invoice
- the amount due
- VAT amount (if applicable)
- the total amount owed
- your payment details
- the payment reference number
- your payment terms (if applicable)
It’s always best to go into too much detail, rather than too little, in case a discrepancy arises with your client. The more specific you can be about what you are charging them for, the less likely they are to come back to you with queries about your invoice, saving you both precious time.
Mistake #4: Not chasing overdue invoices
Chasing payments is awkward but necessary. Without chasing, you set a precedent for late payments, weaken your agreement with the client, and you risk not getting paid at all.
The solution: create an invoice tracker
Use an invoice spreadsheet to track the status of all your invoices and payments. Download our invoice tracking template.
Mistake #5: Not having a clear process
This is the most common problem for smaller businesses, which don’t necessarily have the time to spend elaborating a clear process from the outset. Invoicing tends to be something you do instinctively, without giving the process much thought. But as your business grows, it becomes increasingly important to have a clear and replicable process in place.
There are a few things you can do to rectify this.
- Have a basic invoice template that you can use so that you are just giving yourself fields to fill in. By using the same format every time, you’ll make yourself look more professional and your brand more consistent. Here’s one we made earlier.
- Label invoices consistently and file them in date order so that you can clearly see how many invoices you have sent in a month and when. For example, ‘Your company name_year_month_invoice number that month’.
- Pay attention to your client’s requirements so that you know when to invoice, what format to send it in, and who to send it to. For example, it might be that your client prefers to receive invoices monthly and in PDF format.
- Make sure you check your invoice carefully, paying particular attention to things like currency symbols and how many zeros you’ve put on the end of figures. Make sure your figures all add up before you hit ‘send’.
- Clarify the payment terms on your invoice. While your client already knows the terms of your agreement, it doesn’t hurt to spell this out. For example, at the bottom of the invoice, you could write ‘payment due by [day/month/year]’. Then, if you do need to chase up an invoice, why not use a ready-made email template?
Making invoice payments easier
At Juno, we’re on a mission to make it easier for you to get paid. Register for exclusive access to add smart payment links to your invoices and get paid faster, straight into your bank account.