Every stage of a business project is important for its successful completion.
However, some of these phases can cause more damage than the others. For instance, performing your tasks craftily and on time is among top priorities.
Still, this joint effort of knowledge and time management won’t worth a penny if you fail to meet some common standards for invoices. On the other hand, making mistakes when collecting your bills could have a negative effect on your business.
This is why we’ve made a list of ten mistakes you should avoid during the invoicing period.
It will help you save your budget and build a positive reputation.
Addressing the wrong department/business
When your business is small and your projects are scarce, it’s easier to track your clients and send your invoices. Nevertheless, as you’re getting new clients, you might lose track of invoices, due dates and your clients’ contact details.
While sending an invoice to a wrong client isn’t a fatal mistake, it might lead to some inconveniences. For instance, the party whose confidential business data are sent to a third party won’t be too happy about it. Moreover, your business will look unprofessional, which will affect your reputation.
Likewise, delivering your invoice to the wrong department can also lead to some payment delays. It will either roam from one department to another or they will send it back to you. In the meantime, you’ll lose some precious time. Also, you won’t get paid on the due date from the invoice.
Therefore, perform the following actions when you acquire a new client:
- Connect with their LinkedIn and Twitter account, as well as with their business page.
- Add their Skype and Viber contact.
- Explicitly ask for the contact details of their accounting department or/and the information about the numbers of their accounts.
- Enter these payment data into your invoicing tool.
By doing all these actions, you’ll reduce the risk of sending an invoice to a wrong department or, God forbid, a completely different business.
Sending scruffy, incomplete invoices
Not knowing something isn’t a shame. What’s embarrassing is not wanting to learn something new.
Translated to the world of invoicing – you shouldn’t create your invoices on the basis of your personal preferences. This is why it’s important to organize every invoice in a certain, standardized way.
It will ensure that every client in the world reads it with ease.
Apart from that, it’s essential to populate your invoice with all the relevant data about the project and the payment terms. Another clever thing to do is check if your national or local authorities have issued any specific tax instructions for your business. If so, include them in your invoice, as well.
It’s easy to create a visually enticing invoice in Microsoft Word or Excel when you have a model to follow.
On the other hand, a safer path to a great invoice is to use a pre-made pattern. These invoice templates will ensure that you send perfectly organized invoices in every project.
Delivering invoices too late
The plague of late payments has overtaken many once-propulsive business markets by storm.
According to the report on payments in Europe in 2016, 33% of the surveyed business owners claimed that late payments had endangered their business future. Also, 25% expressed concerns that they’d have to dismiss workers on account of payment inconveniences.
These financial trends should serve as a serious warning.
So, treat the payment issue with greatest determination.
What will help minimize the number of late payments is not delivering your invoices too late.
The rule of thumb here is to send the invoice immediately after you’ve finished working on a project. On the one hand, you’ll avoid the risk of forgetting to send it in the first place. On the other, the other side will be able to calculate that expense in their payment plans.
If you deliver your invoice too late, you’ll have to wait for your client’s next payment period.
As a result, you won’t be able to use the assets you’ve earned.
Leaving late payers alone
We’re still in the late payments department.
One of the burning issues of this field is not reacting properly on clients who fail to pay invoices on due dates.
If you’ve ever experienced such a problem, you know that it’s not easy to make the right decision here.
On the one hand, you might lose your client if you react too hastily. On the other, the client could simply turn a deaf ear to your requests if you wait for too long.
Because of that, it’s important to speak your mind when you notice that a client is stalling with a payment.
The greatest mistake regarding collecting your bills in this case is leaving late payers alone. For instance, you should use a set of reminders, to prevent an uncomfortable situation, or to make a proper reaction if necessary. For instance, you can adjust your invoicing tool to set a reminder to every client five days before the payment due date.
If this message is ignored, react promptly and send a reminder two days after the due date.
Here you should inform the late payer on the next due date.
Also, warn them that you’ll have to charge an extra fee if they don’t pay their debt on that date.
It’s more likely to get paid in a reasonable scope of time when you apply this set of gradual reminders.
Forming the final price without including separate items
Your invoice should contain much more than just the details about your business and the final price.
While it shouldn’t be as detailed as a proposal, a well-arranged invoice needs to have the key actions you’ve done while working on the project.
Also, each of these items should come with the costs you had to cover to get things done.
For instance, if you’ve made a mobile app, write down how much you paid for certain software license fees. Also, include the expenses of the Q&A sessions.
Finally, you should also add the cost of your direct work.
As opposed to that, leaving out these basic steps could raise some questions, budget-wise, even if your client earlier accepted your estimate.
When you show them the separate items vital for the project, they’ll rest assured, knowing that the price they’re paying isn’t too high or (less probable) too low.
Including non-agreed items
When you’re shaping the content of your income, it’s imperative not to include the items that weren’t part of the project estimate. This would be the fatal mistake that could not only ruin your relationship with that particular client, but also give your business a bad name.
For example, if such a thing happens to a freelancer working on one of those freelancing platforms, the damaged client could give them a poor review. Consequently, this professional might have fewer clients and lower revenues.
Therefore, always go through the correspondence you had with your client during the negotiations. Furthermore, follow the items you included in your estimate and make sure that they’re contained in your invoice. Businesspeople who work on many projects can easily miss a detail or mix up the terms from different projects. This is even more acute with freelancing individuals. These steps will prevent them from committing the mistake of charging something they shouldn’t.
Omitting the terms of collaboration
No matter if you’re an experienced entrepreneur or a business beginner, you always need to discuss the terms of collaboration before you start working on a project.
Apart from that, this process should be repeated at the end of the work, when you’re collecting your bills. Of course, you won’t copy the entire “Terms” section here, since an invoice requires short and concise formulations.
However, you’ll include the elements relevant for the invoice and the payment process.
For instance, you can state that any additional changes that weren’t required or arranged before you sent the invoice will be charged separately from the rest of the project.
Moreover, this section can also contain the payment due date.
What can also be added in section about the terms is the aforementioned clause in case the client is late with their payments.
Offering insufficient payment options
The global B2B-scene is so lively that new professional relationships and connections are developing at lightning speed.
The emergence of innumerable variables has led to the increased demand for various payment options.
Therefore, if you offer your clients only few payment gateways during invoicing, some of them might have problems paying you for your work.
So, what you should do first is ask every client about their preferred payment methods before you start working for them. Sometimes it won’t pay off to accept some small projects if those clients can’t pay you at once.
Needless to say, the most practical thing to do is offer as many payment options as possible.
However, it might be too expensive for a smaller business entity to pay several monthly fees or any other subscription or transaction fees. To reach a compromise between your business needs and the market requirements, accept the most widespread credit cards and the most popular international payment solutions.
By doing so, you’ll ensure that your clients pay most of your invoices on time.
Forgetting to add the due date
Believe it or not, this is a common mistake among business professionals.
They simply forget to add the payment due date.
While it’s not a big mistake, it will still slow down the entire payment process.
It might take days, even weeks for the other party to notice that the date is missing. Also, in some cases they might even forget to inform you that you forgot to put the date in your invoice, leaving you without your payment.
Additionally, it would be wise to revise the sole formulation of the due date.
Namely, some people prefer stating the due date as “upon receipt”.
This isn’t the most precise formulation in the world, since the other party can argue on the date of invoice reception.
Because of that, it’s better to avoid any ambiguity and go with the exact date on which you expect the payment.
Calculating the price in the wrong currency
Due to the globalized nature of modern business, many business professionals combine several currencies in their projects.
This amalgam of clients and their monetary preferences can result in payment mistakes.
Again, you should use the accepted estimate as your reference point. The currency your client wanted to use at the beginning of your collaboration should be the one you include in your invoice.
If you don’t meet your clients’ demands, you’ll end up paying the conversion fees, which are pretty high.
Also, the chosen payment solution might charge your client for this conversion, what’s even a worse option. You’ll leave an impression of an unreliable professional for not following your agreed terms, currency-wise.
Conclusion
Sending invoices and collecting bills for your work can be done without too much stress these days.
Numerous invoicing solutions, ready-made templates and improved conditions of online collaboration make the payment process much easier than before. However, there are still some mistakes that can result in uncomfortable or even terrible effects. Our guide has shown you how to keep your invoices in order and establish control over your payments.
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