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FIFO and LIFO are two accounting methods for valuing inventory. FIFO is considered to be superior, but LIFO also has its merits. This post discusses both methods and provides an example that...
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What 5 Things to Check on Every Invoice You Send

Sending invoices and tracking down payments can be a frustrating part of life for any small business owner. To many, invoicing can be a particularly tedious task.

5 invoicing musts with ZarMoney

It’s important to give your outgoing invoices the attention they deserve though, so you can avoid causing confusion, or even delaying payments, because of missing or incorrect details. To get into the specifics of why accurate billing is so important to small business financial management, we want to share five items you should double-check on every invoice you send. 

Before taking a look at these critical elements, let's get vocabulary in order.

What Is An Invoice?

It is a commercial document with time recognition that is used for recording transaction between two, or more, parties, mostly between a buyer and a seller. Invoice often specifies terms of the deal, payment methods, time limit for payment and any additional information discussed between the parties. 

We distinguish a few types of invoices, among most common being:

  • Receipt
  • Bill of sale
  • Debit note
  • Sales invoice
  • Online electronic record

Each type of invoice has its specifics, but that isn't important for this read. To learn more about how to define invoice and details on different types of invoices, check out this guide by Investopedia

Now that we understand what an invoice stands for, let's take a look at 5 critical points every invoice must have right in the order you get paid seamlessly. Make sure...

#1: That You’ve Charged the Correct Rate

It’s surprisingly easy to bill a customer for the right item or service, but the wrong amount, simply because you’ve forgotten to factor in specials, promotions, pre-paid discounts, or other adjustments. Not only is this kind of mistake likely to hold up your payments, but it could lead your customer to wonder whether you have purposely overcharged them, and that’s never going to be a good thing for future sales.

At the other end of spectrum undercharging your customer could lead to your financial troubles, and it would be super hard to get from some clients full amount after you have already issued an official invoice with a lower amount. For one-time buyers, it could lead to a very uncomfortable situation when you know client won't pay more and you are obliged to supply, or already supplied, good and/or service.

#2: That You’re Sending it to the Right Person

Sending the right invoice to the wrong person is almost guaranteed to slow the payment process down. This is particularly true in large organizations, which may have inter-departmental mail procedures that take time to work through, and hundreds of thousands of invoices to process at any given time. Double-check that you have the right contact and address before sending any bill.

In the worst case, the invoice will get lost in the process and you will wait for far too long before issuing a new one, potentially slowing down whole customer relationship, and endangering your company's cash flow.

#3: That the Appropriate Job or Project is Listed

It’s important that the recipient of your invoice be able to understand not only what kind of work was done or product was sold, but also which job or project it needs to be billed to. In fact, it’s a good idea to double-check with your customer to see if they have specific codes they need you to use for invoicing different items. Knowing and including those could cut down the back-and-forth time between your customer and their accounting department significantly.

Some of your clients will be using external accountants and therefore there will be third party communicating the process - but not necessarily with you. And how many times happened that accountant simply didn't recognise work done on the too general invoice and that's why simply ignored it? Trying to contact such an accountant can be in vain, as he most likely won't listen to you in the first place, as you are not the person paying him for his services.

#4: That You’ve Included Two Good Company Contacts

Every invoice should have at least two contact names and telephone numbers prominently displayed: one for the person who authorized the invoice from your business — probably you, as the business owner — and another for the person who authorized the purchase at the client company. That way, if there is any confusion about what the expenses were for, or if payment of your invoice needs to be approved by a manager, it will be easy for them to locate the individual in question. To make things even clearer, you could include the dates that the work or product was ordered and delivered.

#5: That Your Address and Phone Number are Correct

If you have moved offices at some point or expanded your business to multiple locations, then you should go out of your way to make sure the customers know where to find you… and where to forward payments to. Having a check sent to the wrong mailing address can mean waiting weeks for it to be forwarded by postal carriers, or much longer if a new payment has to be reissued.

While invoicing might not be an enjoyable task, sending out accurate bills and statements is the most important step you can take towards being paid quickly and correctly. Get into the habit of double-checking the invoices you send for all of these items and you’ll greatly reduce the odds of finding yourself tracking down a missing customer payment later.

Did you know that on market there are several software solutions helping with your invoicing, making sure all the information is accurate and up to date? Making sure no invoices fall through the cracks?

And did you know you can try ZarMoney completely for FREE, with no future obligations? Start your FREE trial and see why so many business owners love our cloud accounting solution.

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