Invoices. They come in as many shapes and forms as your customers and as with many things in life, some are better than others. If you’re starting out in business and are about to experience that satisfying feeling of sending your first invoice, make sure you hit the ground running from the start, with an invoice has your back if you need to enlist debt collection services.
There is of course one essential detail before you even think about what information should go on your invoice, and that is to let your customer know what the invoicing process is, especially around delivery of the invoice (post, email) and when they can expect it to be raised.
Now, onto creating those invoices!
Your invoice will consist of templated fields that remain the same for each customer and sale, and those that vary according to the transaction. We recommend that you use an invoice template. The great news is that there are literally hundreds of these around, including a a template that comes with your accounting software, Word or Google doc, or a spreadsheet with built in formulas to calculate totals and taxes.
We highly recommend chatting to your accountant who can make sure you have everything covered. Using an accounting software program is the best defence against making mistakes, plus they have been designed for user experience, making it easy to create invoices and simple to track them.
Static invoice fields
• Your business name and contact details.
• Your business logo – an invoice is just as an effective showcase of your brand as any other public facing document, so keep it within the style of your other brand communications.
Variable invoice fields
• A unique invoice number. This numbering system is essential for you and your debtors to be able to track and invoice through receipt to payment, and also assists with any auditing requirements. There are many patterns you can use for invoicing, including sequential numbering, having a unique customer prefix code and sequential numbering, or incorporating the date into your invoice number. Whatever you choose, be consistent!
• A description of the goods and services supplied. From this the buyer must be able to understand what they are paying for. If you previously provided a quote, use this same terminology in your invoice so your client understands these were the goods or services agreed.
• Stating your payment terms is important, including when you expect payment and any penalties for late payment. This gives a clear communication to your clients of what you expect.
If you’re new to invoicing, ticking off everything on this checklist the first few times that you prepare an invoice will help you get into the swing of things:
• Invoice number
• Customer name and address
• Customer reference and order or PO number if appropriate
• Description of the goods or services
• Individual breakdown of costs where relevant and total cost, including GST and any delivery charges
Two Top Tips
Remember if you are using a Word template, make sure you save into pdf format before sending as that gives you added protection against fraudsters.
Try and stick to one page if possible by adding a breakdown of services in an attachment or quote and summarising this work on the invoice.
You should now be armed with all the information you need to create invoices that will grow your business cashflow. If there’s one golden rule about invoicing though, it’s to remember to send them! When you’re busy running your business, invoicing can often be relegated to a task that you’ll do later. But without an invoice, you won’t get paid. Some people invoice as they go at the end of the day or a week, others save it up until the end of the month and do a batch. Whatever you do, make it a regular occurrence and set reminders. You’ll soon be an invoice black belt in no time!
Every day we’re faced with urban myths about politics and celebrities, and on a less scandalous scale, myths around managing our finances. While the world of celebrities doesn’t have much impact on our daily lives, nothing is more personal to us than business cash flow.