As a business owner, you aim to make money out of your products and services. Once you complete the sale and raise the invoice, you must ensure you get paid on time. Hence, it is imperative for business owners to have an effective invoicing system. A good invoicing system helps you manage and track payments efficiently. It also ensures your cash flow stays positive and you do not face a financial crunch. While large businesses have an accounting team to handle invoicing, small businesses usually face difficulty in managing them. Here are a few tips to help you implement an efficient invoicing system.
Automate Your Invoicing System
The first step to efficient invoicing is automating the system. Managing manual invoices is a task. There are chances of losing or misplacing them, which eventually affects your cash flow and accounting. To avoid this, adopt an accounting software or an invoicing program to make the process easier. Use platforms like QuickBoooks, FreshBooks, Hiveage, and Billbooks to automate the system. These programs allow you to send reminders, which will help ensure efficient tracking and payments done on time. It minimizes the risk of misplacement and loss and makes invoice management easier.
Create and Use a Template
Creating and using a standard invoice template will make the process easy and quick. You save time by preventing the creation of new invoice templates every time you complete a delivery. Additionally, as your clients get used to the format, the payment processing from their end will quicken.
Number the Invoices for Easy Tracking
By numbering your invoices, tracking them becomes easier. As your business grows, you will have a large number of invoices being raised. Using a unique code attached to each invoice will make it easier to keep a track of it. These codes can either be numbers or a mix of letters and numbers. Numbering invoices leads to better tracking and record keeping, making invoice management easy.
When creating an invoice, make sure you are specific about goods and services the client has to pay for. Include details of hours worked per item and clearly specify individual rates for goods or services and any taxes applicable. Make sure there is sufficient clarity. At the bottom of the article mention terms and conditions for payment. Providing details will avoid any confusion and lead to quicker payments.
Prevent Delay in Raising Invoices
Successful invoice management involves raising invoices immediately after the goods or services are delivered. Delay on your end will lead to late payments and affect accounting and financial management. For better invoice management, you must have a timely process of sending them out.
Provide Short Payment Period
Typically you should have a deadline of 30 days or less for getting payments. Research shows that an average debtor pays two weeks late. So if you want to get paid within a month, then it is best to have a deadline of 15 days or less. While in some cases business owners may need to have longer deadlines, short payment period is best if your business accommodates.
While implementing these tips help, many businesses resort to outsourcing the task for an efficient invoicing system. Outsourcing invoice management is a cost-effective solution for an organized invoicing system.