If you run a small business you will understand the importance of effective invoicing. There are a number of tips that you should consider that could help make your invoicing more effective.
Automating The Invoicing
One of the best ways to streamline your invoicing is to use invoice software. There are many different invoice software packages on the market and some will be designed to help large businesses while others are focused on small businesses. Ideally, you would like to have an invoicing system that links to your accounting software.
The use of invoice software will not only make your invoicing faster, but it will also reduce your costs. Companies that use these systems have found that their invoicing costs have been reduced by 40 to 70%. Automation of the invoicing will also cut down on manual errors which can be an embarrassment for your business.
Set Shorter Payment Terms
The standard payment terms for invoices is 30 days, but you can adjust this. The accounting software Xero analyzed 12 million invoices and found that most customers will pay 2 weeks later than the expected payment date. This is why they recommend that you set your payment terms at 13 days if you want to be paid within 30 days.
Look At Electronic Invoices
Electronic invoices are a great way to effectively get your invoices to your customers and help them pay the invoice. When using electronic invoices you can include a link to an online payment method such as PayPal. This makes it easier for your customers to pay you and you could get paid faster. This is something you should consider if you are going to cut your payment terms.
Have A Numbering System
A numbering system for your invoices is generally a legal requirement, but you need to consider what system you use. Most businesses will have a number based system, but you can also include letters into the system if you want to. A lot of companies will start with 001 as their first invoice, but this is not recommended by the experts. Experts recommend that you start with a higher number as this makes your customers believe that you are a more established company that has invoiced more people than you have.
There are a number of tips that you should consider to make your invoicing more effective. The best solution is to automate the process with software that links up to your accounting software so you can effectively track your cash flow.