So you have done the work, sold the products and services and the time to get paid for your efforts has finally arrived.
Sounds awesome?
Well, indeed it is!
However, pardon us, as we might just burst your bubble with commonly made bloopers in invoicing that can set you back professionally and tarnish your relationship with clients. Cease to fear amigos, as we are going to help you identify and fix the same effortlessly!
Whether you are a freelance writer or a bootstrapped startup entrepreneur, money is the most essential part of your business, because hey, it would be charity had we been doing it for free! Ensure that you get paid on time for your work and the first step towards receiving the money begins with building the perfect, error free invoice.
Psst! May we suggest the awesome, par excellence and trusted by millions online invoice payment processing app, none other than Moon Invoice.
Happy reading!
Common invoicing errors and bloopers that you can totally give a miss!
Blooper 1. Delaying sending your invoice
Assumption and business don’t mix. You may share a wonderful relationship with your clients, however if you forget to bill them for your services, they may just conveniently forget to pay you!
It’s pretty much as logical as 1,2,3. Make invoicing your priority because you deserve to get paid, and yes, on time too! We will get to that bit later.
A missed invoice can significantly affect your cash flow. The faster you deliver your invoice, the better are the chances of you getting paid, well before the due date.
Blooper 2. Lack of legal contracts – Because you need more than the credibility of the spoken word to rely on!
Before you start working on a client’s bespoke requirements, ensure that you guys chalk out a detailed contract that puts both the parties on an equal footing. Curate specific terms about accepting invoice payments online and the preferred modes of payment beforehand.
In case the grapes turn sour, you will always have paperwork to back your stand.
Blooper 3. Send the invoice to the wrong department or person
So you think that you have sent your invoice to the right person in the right department and are probably chilling with a chilled beer expecting the payment credited message any time now.
Well, if you still haven’t received your payment past due date, you should probably have a look at the name and designation of the person the invoice has been billed too.
If you are dealing with a large organization, they probably have a particular finance and payments department in place for dishing out month end payments. Sending an invoice to the wrong department reeks of unprofessionalism. So ensure that you check and recheck your invoice before hitting that send button!
Blooper 4. Sending out a tardy, incomplete invoice
You need to take invoicing seriously for your clients to take paying you on time seriously as well. Error riddled, spelling mistakes plagued, un-detailed invoice will only leave a not-so-good impression on your clients.
Ensure incorporation of the details that your client or rules of governance of your country might require on a model invoice. They could include the following particulars;
- Physical address of the payer and the payee
- Business brand name and telephone/fax no., email ID
- Invoice number (we couldn’t stress the importance of this one enough!)
- Name, designation and department of the individual the invoice is being billed to
- Invoice date
- Due date
- Payment terms
- Mode of payment
- Detailed itemization of the products/services supplied
Looking for the best client payment tracker app?? Try Moon Voice for sorting all your invoicing issues.
Blooper 5. Forgetting to mention a specified due date for payment
Do not by any chance, fail to mention the due date on your invoice. When you send “open invoices” with vague payment terms on it, your invoice can always be open to interpretation.
The phrase “as soon as possible” may translate into an immediate payment for one and a thirty day period for another. You have got to be specific, with a date mentioned clearly under the due date column.
Refrain from using terms like “Net 30”, as many might not be privy to such terms.
Blooper 6. Lack of detailed itemization on your invoice
When you visit a departmental store, you always ask for the bill before shelling out the dough. Same is the case with your client.
He/she would like to know exactly what they are paying for. Chances of reverting to and clearing a bill that has a vague lump sum amount mentioned on it are bleeker.
Ensure that you mention the details of each product sold or service rendered with the requisite amount of man-hours, price per unit, total price duly mentioned.
If you make it a practice of sending out detailed invoices, you will have to field off lesser query mails regarding items mentioned on your invoice.
Blooper 7. Lack of basic etiquettes in your invoice
Mind your P’s and Q’s and you are pretty much good to go! We humans are wired to respond positively when addressed in a friendly or pleasant manner.
Including phrases like “thanks for your business” or “please credit payment by”, go a long way in building a good rapport that goes the extra mile.
Blooper 8. Forgetting to follow up
As you don multiple hats in an endeavor to make ends meet, you tend to let the seemingly little things such as following up on that last invoice slip through the crevices of your overworked mind.
Plan as much as you can and do remember to drop in on that unpaid bill and send regular reminders till the payment gets credited.
Blooper 9. Sending out invoices riddled with silly mistakes
In the world of business as in life, time is money. Don’t waste the precious time of self and others by rectifying and resending error riddled invoices over and over again.
Try to get the information right in the first go as it spells professionalism and ingenuity.
Wrapping up
To sum up, your invoice represents way more than your claim at a fair price of your services rendered and goods sold. It speaks multitudes regarding values such as professionalism, transparency and politeness. First impressions are pretty much the last, and don’t mess up yours with a tardy bill!
Recurring Payments Vs Recurring Invoices
| Recurring Payments | Recurring Invoices |
|---|---|
| Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved. | Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves. |
| A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this. | A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies. |
Pros and Cons of Recurring Invoices
| Pros | Cons |
|---|---|
 You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered. |
 You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created. |
|
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly. |
It could be difficult to cope with recurring invoices if a transaction fails for any reason. |
| Net 45 | Invoice is due in full within 45 days with no early payment discount offered |
| 2/10 net 45 terms | 2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days |
| 1/15 net 45 terms | 1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days |
| 1/10 net 45 terms | 1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days |
| 1/7 net 45 terms | 1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days |
| Category | Net Method vs. Gross Method | Explanation |
|---|---|---|
| Calculation Approach | - Applies tax credits first; reduces taxable income before computing tax liability. | - Doesn't apply tax credits; computes taxable income without considering tax credits. |
| Tax Credit Eligibility | - Allows for greater likelihood of tax credit eligibility due to reduced taxable income. | - Limits tax credit eligibility because taxable income hasn't been reduced yet. |
| Itemized Deduction Requirement | - Lowers threshold requirement for itemizing deductions due to decreased taxable income. | - Raises threshold requirement for itemizing deductions due to higher taxable income. |
| Advantages | - Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits. | - Results in higher taxable income compared to net method. |
| Disadvantages | - May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits. | - Increases taxable income and may result in higher overall tax bill. |
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