In 2022, small businesses with no employees brought in an average annual revenue of $44,000. If you want your business to enjoy a healthy flow of money coming in each month, it’s essential for you to collect payments from customers on time.
As a business owner, it’s your job to make sure your invoices are clear and easy to understand. If you do this right, your customers will be more likely to pay you on time. Keep reading for 5 common invoice management mistakes that might be holding you back.
1. No Standard Template
Invoices should be consistent to maintain accuracy and efficiency. If each invoice has different information on it, then no one will know what needs to be done next when they’re given an invoice for review or payment processing. Pick an invoice template that works for your company and stick with it.
2. No Reminders
Reminders are important to have because it helps you get paid on time. If you don’t send reminders, your clients may view your invoices as a formality. They’ll forget about them until they receive the final invoice at the end of the month.
This can delay payments and result in late fees. You should send a reminder a few days after you submit the invoice. That way, the invoice due date won’t come as a surprise to your clients.
Not sending a statement of account (SOA) is another common mistake. This document details all charges incurred over a period. You should send it after the invoice but before payment is made.
This helps ensure that the payment terms and conditions are accurate before finalizing payment arrangements with clients.
3. No Automation
Automation is a great way to save time and resources. By using automation, you can send reminders, store digital copies of invoices, and create digital invoice backups in a few clicks. Embracing Electronic Data Interchange (EDI) systems can further streamline this process, allowing for seamless and efficient transmission of invoice data between your business and your clients’ systems. Automated systems also alert you when invoices are due, when payment has been made, and when a client needs additional information.
4. You Don’t Monitor Invoice Status
Review your invoices every day, checking for payment information. If you see a payment, record it in QuickBooks or another accounting system and adjust the balance as necessary.
If you don’t see any payments after sending out an invoice, send it out again with a friendly reminder including the open invoice meaning.
5. No Invoice Backup System
There are many ways that you can back up your invoices and keep them secure from loss or theft. One method would be an online storage provider such as Box, Dropbox, Google Drive, or iCloud. Another choice would be an external hard drive or flash drive.
Avoid These Common Invoice Management Mistakes
The key to avoiding these common invoice management mistakes is automating as much as possible. With automated systems, you can create and send invoices, track payments and invoice status, send reminders when needed, and manage your accounts payable processes more efficiently.
If that’s not enough to help streamline your business processes, we have lots of other tips in our business section. Explore a few of our articles for more advice on running a successful business.
