5 Invoicing Mistakes You Can Avoid with Bookkeeping Solutions

An average day of a business owner is usually overloaded with dozens of work tasks and appointments. If you’re constantly under a lot of stress, it’s more likely that you’ll make a mistake in the figures you’re working with. Accounting mistakes aren’t always easy to correct and, what’s more, they’ll most certainly cost you time and money.

In order to help you improve your bookkeeping efficiency, we’ve analyzed some accounting mistakes typical for SMB-owners. Each of these mistakes can be avoided if you use a bookkeeping solution as your accounting assistant.

Not changing old invoice dates

While editing old invoices for the same client is a common practice, doing it manually increases the risk of mistakes. If you’re still using Word and Excel for invoicing, it might happen that you forget to change the invoice dates.

As a result, your clients will be confused with these new invoices and will most probably ask for clarification. During that correspondence, you’ll lose some precious time and you’re going to get paid much later than expected.

What you can do to reduce the risk of keeping old dates on your invoices is stop invoicing in Excel and Word. As an alternative, you can go for any of the mainstream accounting tools or smartphone apps. In most of them, invoice dates are automatically synced with the date on which invoices are being created.

The takeaway: Using accounting software tools will help you send out invoices with proper invoices dates.

Skipping project details

Specifying what you’re charging for is a common thing to do in every invoice you make. In most cases, writing only the name of the project or its main features in an invoice is enough.

However, sometimes you’ll be working on projects that consist of several stages. Such projects are usually paid in an equal number of installments. This is where you should include more project details in every new invoice you send to your client.

For instance, if you’re a web designer who needs to create an original website from scratch, you’ll need to make a framework, create separate pages, test the UX features of different versions and then place the website on the right server. All these phases should be charged separately – it could be on the same invoice, but clearly specified under different points.

Because of that, you should make your project estimate as precise as possible. It’s a practical way to define the stages and the number of invoices within a project, as well as your and your client’s responsibilities. By doing so, you’ll keep all the costs and prices visible from day one. Project cost management tools can come in pretty handy in giving the right estimate and coming up with a proper number of invoices.

Omitting taxes from invoices

When you want to pay for a drink in a café, you get a check in which the price of that drink and the tax are calculated separately.

Keeping the sale price and the tax of a product apart on a check is a common thing. This is exactly what you should do on your invoices. In line with that, the first part of the charged sum should be your work, the second the cost of used materials and the third feature of every invoice should be the tax.

What can happen to a busy SMB-owner is simply omitting taxes from all invoices. This can cause problems on two different levels.

First of all, you might completely forget to include those taxes in your tax return, so your books won’t be accurate. This will result in issues with the tax authorities and even a financial penalty.

Further, you’ll need to deduce the tax from the payment you required from the client. That way, you’ll actually have to take assets from your net income on that project to cover the taxes.

If you use accounting tools, there’s no risk of leaving out taxes from your invoices. In most contemporary solutions you just enter the tax percentage and they immediately define the amount of money that should be paid for taxes.

Not hedging yourself from scope creep

Both small business owners and freelancers are the backbone of every economy and yet this vital spine is often mercilessly bent by clients via scope creep. While this doesn’t have to be the case with some clients, others will ask you to do innumerable corrections and changes on your projects. If you allow such an approach to your work, you’ll be wasting dozens of hours doing futile things for clients who simply don’t know what they want.

Because of that, it’s extremely important for your productivity to hedge yourself from numerous changes in your projects.  For instance, you can add a few lines that will define the project changes policy at the end of every invoice you make.

In most accounting tools it’s possible to create and save a template, which can later be added to invoice footers.

Moreover, you should know that one of the major reasons for the failure of small businesses is an uneven cash flow. It’s usually caused by late or incomplete payments.

This is why you should define your late payment policy in each and every invoice you deliver to your clients. Together with the clearly stated number of allowed changes per project, it will ensure higher productivity and a steady cash flow.

Saving invoices only on your computer

Even though manual invoicing is understandable, especially for small offline businesses, saving invoices only on your computer is a hazardous thing to do. Your computer can crash and your hard disk can stop working at once. If you don’t back up your invoices, you might lose track of all the payments you’ve made and received.

So, if you’re still doing your invoicing manually, at least make a copy of every invoice you make and save it on a memory flash (or even better, somewhere in the cloud).

Since this might become tiring after a while, it’s wiser to completely abandon manual invoicing and start using the benefits of online invoicing.

When you create invoices online, you can automatically save them on the cloud, which is a great way to keep a spare copy of every invoice you make. Also, you can save one copy on your computer, as well.

What’s more, you can access these invoices whenever you want and edit them for new payments. Cloud accounting tools will memorize the date entered for each invoice and make it easier for you to make necessary changes and send updated invoices to your clients. Moreover, these solutions will receive and process the invoices you receive in an equally successful manner.

Conclusion

Accounting solutions come with dozens of options for every sort of invoicing and bookkeeping needs. You can use them to categorize your invoices by clients, invoice dates, payment deadlines, and many other features. Therefore, accounting solutions will help you keep your invoices organized and paid on time. On the other hand, you’ll manage the invoices you send to your clients in a much easier way, as well. Finally, cloud accounting software tools will enable you to go one step further and do your invoicing on the go. All these options will help you keep your accounting and invoicing under control.

Mark Thomasson
Mark is a biz-dev hero at Invoicebus - a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.
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