When starting a new business, or seeking to improve cash flow in an existing business, one of the most important areas where significant improvements can often be made is the invoicing process.
After all, getting paid faster and with less time spent making it happen, while simultaneously impressing your clients and slipping in an effective advertising message, is going to have a huge impact on making your small business grow.
Here are 7 key elements that should describe every business invoice you send, and if they do, you can be confident it will have a positive impact on your cash flow, growth, and bottom line.
1. Professional Look
Your invoices are not only the lifeblood of your business’ continued existence, they are also a reflection of your company to your clients. Creating a sharp, professional look will represent your business well and cause customers to take you seriously.
Your invoice header is the first thing your client sees, so it needs to make a strong, professional impression. It should prominently feature your business name, contact information, and logo. This not only brands the invoice but also makes it easy for clients to contact you for any clarifications.
2. Unique Invoice Number
Every invoice should have a unique number. This is crucial for organization and tracking, especially for tax and legal purposes. It helps in tracking payments and managing client accounts efficiently. Establish a consistent system for your invoice numbers to avoid any confusion.
3. Breakdown of the Charge
No one wants to be handed a bill that has no more on it than a dollar sign followed by a number, plus the stipulation that you need to pay that soon. To respect your customers, you need to “explain” the bill by breaking it down.
Start by calculating your cost per unit and deciding on how much you can competitively charge and still meet goals on the bottom line. That is, make sure you’re pricing things right to begin with.
Then, itemize the charges on the invoice, describing all services/goods provided. Don’t forget to add on any taxes, shipping and handling, and all other fees and costs. Using a free editable itemized receipt template is pretty effortless. Simply, add your text description and your company’s information, and submit your invoice. Provided you are a business owner, this can be a win-win scenario for both, your customers and you, regardless of the type of business you run.
4. Emphasize the Due Date
Not only should every invoice include a due date, but it should be printed prominently and multiple times in different locations on the page. Put it in bold type and larger font size, and be sure to mention any late fee that will apply should the payment be late.
Also, make sure the due date is predictable, set at regular intervals. List the acceptable payment methods as well (credit card, paper check, Paypal, Bitcoin, etc.) so there won’t be any confusion.
It’s true you can’t actually force anyone to pay an invoice or to pay it on time, but what you include on your invoices will influence how quickly, on average, customers pay up.
5. Detailed Description of Goods or Services
Clarity is key when detailing the goods or services provided. Each line item should clearly describe what the charge is for, helping to prevent disputes and misunderstandings. This includes quantities, hours, rates, and a brief description of each item.
6. Company Name & Contact Information
Don’t let an invoice get slowed down because a client has a question about it but doesn’t know how to get a hold of you.
Include your client’s name, address, and any other relevant contact information. This not only personalizes the invoice but also ensures that it reaches the right person or department. Be mindful of handling and storing this information securely.
7. Thank You note
Every invoice should thank the customer for being your customer. And every invoice should include a special offer or other promotion to encourage your customers to continue to be such.
Always include these 7 elements in every invoice you send out, and you’re going to see positive results. To survive and thrive in the business world, you have to conquer cash flow as much as the bottom line, so a good invoicing procedure is crucial.
An excellent business invoice is clear, professional, and thorough. By incorporating these seven key elements, you not only make it easier for your clients to pay you but also reinforce your professionalism and attention to detail. Remember, your invoice is not just a bill, but a part of your business’s overall image and client relationship management.