Invoicing does not have to be the fun part of running a small business, but it also doesn’t have to be this tedious, time-consuming horror, either. Small business owners are often too busy planning, or handling daily operations, to give invoicing and payments enough attention, which is why they resort to hiring expensive accountants, mounting up their unnecessary expenses.
That is why we prepared a list of absolutely essential tips for organizing your invoicing system in no time and without having to become or hire a professional accountant overnight!
1. Keep your client data neat and organized.
With a small business, clients are your bread and butter and not losing sight of their data is a must. You have to organize and store all of your clients’ data in a safe and easily accessible place, including information such as their emails, addresses, payment information and follow-up data. You can do this manually, yes, but things can get messy easily as your customer base grows and forces you to keep track of it in your head on a daily basis. Technology can lend a helping hand here, with client management software being readily available to take care of this matter in a fast, reliable and pedantic manner.
2. With invoicing, time is literally money so you better be mindful of it
This may seem like a given, but tracking hours for the services you provide can get confusing if you are juggling several projects or clients at the same time. If you are charging your customer by tracking the time you invest in the work performed, you need a system that will handle it for you and allow you to invoice your clients more accurately. This can be done with the help of dedicated software or an old-fashioned pen and paper (not recommended).
3. Keeping track of your invoices can be delegated to technology, with you still in charge.
The days of dusty registers and sleepless nights before invoicing are largely behind us, thanks to the emergence of automated and manual software-based solutions.
Automated software takes off the burden of having to manually estimate, track and collect payments. The process starts by having the software issue a sleek-looking cost estimate adorned with your brand, which will surely add to your client’s perception of your professionalism. Once you are ready to collect payment, the software will transform this estimate into an invoice which gets automatically issued together with the receipt once the payment has been made.
You’ll also score points with your clients if your software allows them to make payments directly from an invoice or even an estimate. Also, a quality automated software will ensure that your clients always get a payment confirmation notification (an SMS or an email) after you receive their payment.
In advance of buying any software, make sure you check if it supports key features, such as managing payments, clients and calendar from one place, checking if an invoice was sent, confirming its reception, and keeping track of payment and receipts.
4. If you still want to do your invoicing manually, make sure you get rid of pen and paper.
Invoicing does not have to be a messy and time consuming affair. This is helped by making each of your manual invoices speak with a single voice with the help of pre-made templates. Each invoice and receipt you send speaks a lot about a unique visual identity of your business and makes your clients keep returning to a professional who sends them. This is best done with the help of commercially available invoice templates. In addition to being branded, using templates means that you will not forget about essential information that are featured in them, such as your or your customer’s contact information or invoice and receipt numbers. Also, if you have returning customers, templates will allow them to learn where to look for relevant fields to be filled out, making their interaction with your invoices and receipts faster and easier.
5. Keeping everything updated helps you manage your payments efficiently and get a view of a larger financial picture.
Being a small business, hiring an accountant might be cost-prohibitive. Still, widely available invoicing tools now allow you to do their job with style. All invoices come with associated details that you need to update regularly to learn what has been paid, what is outstanding and what is owned. Your accounting software should be able to let you know whenever the funds are sent to your account, as well as inform you if the payments are overdue. Also, quality software of this type should be able to create and send reminder emails to your customers. In addition, profit and loss reports are also useful tools as they sum up all information on paid and updated invoices. Keeping an eye on this allows you not only to avoid missing an invoice, but rather plan a broader financial strategy for your business.
6. Add terms and conditions to your invoices.
Terms and conditions are descriptive texts you can add to your invoices and receipts in order to make your customers better understand what they can expect of you in this regard. Adding it to your invoicing template means that you do not have to repeat your payment policies whenever you send a new invoice to your client. As a bonus, you will avoid unnecessary delays and misunderstandings in case your customer tries to justify their late payments by stating they did not know what you expected of them.
7. Add terms and conditions to your invoices.
Organizing receipts may seem like a distant cousin to invoicing process, but it surely is an important relation! Doing this will save you additional time for actually working with invoices by sparing you the stress of auditing procedures, messy accounting and preparing your taxes in a rush. Keeping the receipt records neat starts by deciding whether to do this physically or electronically. The first option is a bit old-fashioned and you are free to choose the best methodology for this – organizing receipts by chronology means that you’ll be able to find a specific one easier, while doing so by the receipt type can be more useful if you are working with varied client profiles. In addition to being more efficient, doing this electronically can save you even more time and help you cut back on the costs of buying office supplies and storage containers for your physical receipts.
BONUS TIP: Don’t forget to assign invoice numbers.
An invoice number is a unique code assigned to an invoice as a sequence. They help you easily track down due payments and serve as identifiers for record-keeping purposes.They are also a prerequisite for treating an invoice as a legal and valid document. This does not include proforma invoices which are preliminary bills of sale that are issued prior to goods or services being delivered to a customer. When assigning invoice numbers, you need to be systematic. Most of the time, businesses would go for either sequential or chronological numbering.
Sequential numbers can be assigned to an invoice based on a customer number, either with the help of software (automatically) or manually. The numbering usually starts with the number 1. Chronological numbering focuses on dates of issuance and can be combined with sequential numbering to create a final combined format. If you, for instance, have a customer no. 1001 who you sent an invoice dated January 10 2021, the invoice number would look like 202101-1001, with 2021 referring to a year, 01 designating the month of January, 1001 referring to a customer’s sequential number. This is only an example as these numbers can be combined in whatever order you want.