There are several different types of common invoicing issues that businesses may face, from missing or incomplete information to missing invoices entirely. Often, the simplest approach is to ensure that your invoices are as precise as possible. Fortunately, numerous other elements under your control can help you keep your invoice administration running smoothly.
Missing invoices can cause you to spend more time hunting for outstanding ones and ones that should be billed. In addition, invoices that aren’t delivered to the right people don’t get paid, which could mean months before you discover a missing invoice affecting your cash flow and forcing you to start over.
An invoice might be missing for various reasons, including being addressed to the wrong person or company. The incorrect contact could mean the wrong business, department, or individual, preventing the invoice from being tracked down or paid. This may be due to an error in your automated invoicing system or simply a human error.
Ensure that all your addresses are correct on paper and electronic versions of your invoices.
You might also want to consider asking employees such as salespeople to call customers before sending out new invoices. This will help them make sure they have the right company name, address, and contact information.
If you’re using electronic invoicing software, be sure to enter the correct address when sending out documents.
Creating a document that is difficult to understand can end up discouraging your customers from paying you. A confusing invoice could require you to amend and resend the document, which can only increase the amount of time it takes for a client to pay you.
A confusing invoice may have jargon that your business understands but your customer does not. You may also be sending out multiple invoices for the same client and thus causing confusion due to the sheer number of documents.
The best way to combat this problem is by keeping your invoices as straightforward and concise as possible. This means using language that anyone can understand.
Moreover, if you offer multiple products and services, try not to send out more than one invoice per transaction.
If you repeatedly send out invoices for an ongoing project or service, the simplest way to avoid confusion is by developing a standard letter that accurately represents what has been ordered. This can be easily sent along with an invoice to make sure all the relevant information is included.
For any invoice to be processed efficiently, it has to include all the relevant information.
When you create an invoice that lacks information, your payment process is going to slow down considerably. Every document requires a different queue which means more work for accounts payable departments, slowing down the entire system.
Missing data can include anything from incorrect billing information such as an incomplete address or simply forgetting to include a signature. Missing data leaves clients unable to process an invoice, which slows down the process exponentially.
To avoid having multiple invoices rejected for being incomplete, always double check that you’ve included all the relevant information. For example, pay attention to the billing and shipping sections and include a signature page if necessary.
When sending out invoices, make sure you address them correctly and give them ample time to get through before they expire (usually between 14 and 30 days).
Furthermore, keeping your data up to date across all branches of your business is essential. For instance, utilize an enterprise resource planning (ERP) system to acquire new data across all channels.
Errors or Inaccuracies in the Invoice
When you make errors or inaccuracies in an invoice, it can lead to time wasted on the part of your customer trying to correct them. If they’re unable to understand the incorrect detail, it’s unlikely that they will be willing to pay you for not providing accurate information in the first place.
Errors in an invoice can include anything from spelling errors, incorrect items or services, or simply inaccurate numbers. The potential pitfalls of having errors in the invoice, such as stating the wrong cost of a good or service, could lead to unexpected expenses and additional work for your customer.
To avoid having errors on your invoices, double-check all of the relevant data before submitting them. For example, check for any spelling or numbering errors and verify that all information is clear and concise. In addition, if you have more than one person working on your invoices, be sure each person reviews them for accuracy every time.
Invoices are the backbone of your company, and by sending out an incorrect invoice, you’re exposing yourself to potential errors down the line. To prevent this problem, you could employ automated accounting software to review the invoice and do the hard work for you.
Not Confirming Receipt of Invoice
One of the most common issues with invoices is that businesses often fail to confirm the client received them.
Without confirmation from your client that they’ve received an invoice, you run the risk of their not processing it and not paying you. Moreover, a lack of confirmation may mean lost invoices, miscommunication about due dates, and late payments.
Follow up with a phone call or email to confirm receipt of the invoice and politely ask if any issues or questions need to be clarified.
You can also reach out about verifying the details on the invoice, such as the total amount, due date, and so on. This will not only solve potential issues but will also help to establish a positive business relationship with your clients.
If you are sending out invoices via mail, make sure to use tracking numbers or keep receipts of your packages so that if they do go missing, you have proof that you sent the invoice on time.
Collecting Payments From Late Customers
When customers are late on their payments, businesses experience a trickle-down effect that can cause significant issues.
Not only will the business have to spend more money to chase down payment, but it reduces the amount of income available for operating costs, making it difficult to pay all employees and shoulder other expenses.
This issue results in many employees being let go or forced to work reduced hours, harming the company culture. You must consider what to do if you can’t pay your employees and how you’ll recover both financially and production-wise.
If the customer is unable to pay you for whatever reason, it does not guarantee that they will be able to re-pay at a later time. Allowing customers to take advantage of your business by being late on their payments can worsen problems down the road.
The best solution for dealing with clients that are late with their payments is to charge a late fee. This will help incentivize your clients to pay you on time or else face the consequences.
In addition, try and contact them as soon as possible when they do not make a payment on time to avoid any further issues from occurring. Furthermore, invoice factoring can help you since it provides you with the cash you need to pay bills until your clients pay up.
Several different industries use factoring, especially those that are reliant on the cash flow receivable.
For example, many companies that operate within the construction, transportation, and oil industries use invoice factoring to ensure that they have enough liquidity to pay their bills even if their customers are late on their payments.
Typical industries that employ factoring include but are not limited to:
- Medical staffing — Accounts receivable factoring is an expedient and cost-effective method for healthcare staffing firms to assist their company expansion without jeopardizing current payroll, tax, or vendor bill obligations. It allows easy approval, quick cash, and no legal agreement is needed.
- Manufacturing –– Invoice factoring for manufacturing, unlike a loan, merely transforms your existing receivables into cash that you may spend on operating costs. Fax or email copies of your open invoices, and the factoring company will deposit money straight into your account, eliminating the wait for mail delivery or the additional fee for overnight shipment.
- Medical transcription –– As a medical transcription service owner, you have complete control. You can factor how you want when you want, and for how long you want. The programs are adaptable to your unique requirements and objectives.
Factoring is a versatile tool that may significantly impact your business. Consider how implementing it may help you, and your company, achieve new heights.