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Top 10 Invoicing Mistakes Small Businesses Make

Invoicing isn’t easy. But it’s one of the most crucial activities that any business – big or small – has to undertake. Unfortunately, the simple act of sending customers a bill comes with a litany of potential pitfalls.

Invoicing mistakes can hit you where it counts – your bottom line. A missed client expense or incorrect address can delay payments by days, weeks, even months, and hinder your company’s cash flow.

There’s a right way to go about invoicing, and there are numerous wrong ways. The following are some common invoicing mistakes small businesses make when billing their customers and clients.

10 Common Invoicing Mistakes

  1. Not Invoicing: If you don’t send an invoice, you don’t get paid. Simply forgetting to bill a client for services rendered takes cash off the table – and even if you eventually remember, you’re still going to suffer a delay in reaping critical revenues. The solution? Use a system that reminds the proper employee(s) when they need to send invoices.
  2. Sloppy Invoices: The next quickest way to make sure you don’t get paid the proper amount or in a timely fashion is to send out hastily slapped-together invoices that you never double-check. Simple mistakes – such as the wrong number of hours or the incorrect date of a product shipment – can hold up payment as someone tries to figure out what went wrong. So remember to always include things such as the invoice number and date, the client’s name and payment terms.
  3. Wrong Recipients: If you have numerous clients and stacks of invoices to deliver, it’s easy to flub and send an invoice to the wrong customer. But the consequences are more severe than just late payment when you realize your error – you may have just doled out sensitive information to the wrong person, undermining confidence and trust in your operations.
  4. Not Itemizing: “All-in-one” is great for kitchen gadgets, but it’s an easy way to make an invoice go bad. If you send an invoice that encompasses a number of projects, tasks or other items, you can’t just include a general concept provided and a lump sum expected. List every aspect of each project one by one, with rates, fees and/or expenses explicitly listed for each. That way there’s no ambiguity on either side of the transaction.
  5. Underusing Technology: Digitalized recordkeeping and cloud storage are sturdy crutches that help any business avoid invoicing mistakes. Try not to use printed invoices sent via mail if at all possible – there’s more potential for lost invoices, and it’s not as quick. Moreover, don’t just store invoice files on a hard drive in your office; back them up to the cloud just in case disaster strikes.
  6. Not Listing Due Dates: A FreshBooks study of invoices showed that specific wording when it comes to due dates is more likely to get you paid on time. From its study: “Using exact terms such as ‘21 days’ seems to focus the client’s mind around a specific timeframe and will actually get you paid faster than asking for immediate payment.”
  7. Not Using Late Fees: When you set up your agreement with a customer or client, you should establish a system of late fees for unpaid invoices – and spell it out clearly before anyone signs on the dotted line. That will ensure there are no surprises, and give your business partners the incentive they need to pay you on time.
  8. Forgetting About Currencies: If you have international clients, your invoicing software must be able to calculate currency conversion using the most current rates, or you must implement some other sort of system to make sure the numbers are right. Incorrect currency conversion can cost you money and, again, lead to payment delays.
  9. Out of Sight, Out of Mind: If you’re sending out an invoice and simply letting time take care of the rest, you’re doing it wrong. You must keep records of all of your invoices, and set up a system that tracks where invoices are in the process – sent, accepted and paid. Thus, the second it looks like a payment is lost, it’s much easier to find the missing link in the chain.
  10. Not Consulting the Pros: McManamon’s accounting experts provide a host of services to small- and mid-size business, and invoicing is one of them. That’s in addition to record maintenance, financial statement creation and even accounting staff training.

Make sure every last invoice you send out is in pristine shape. Call McManamon & Co. at 440.892.9088 or contact us online to make sure your company gets paid for all the hard work you do!

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