A joint report by FIS Global and Amalto indicated that incorrect invoices contribute to 61% of late payments. Even though software solutions and free professional invoice templates have made the invoicing process automated, invoices continue to be full of errors. This problem is more widespread among small and medium businesses.
In this post, we’ll go through a step-by-step process of creating a professional invoice. Let’s get started.
Steps to Creating an Invoice
Creating an invoice is the first step towards earning revenue. It records all the products and services you’ve provided and their corresponding costs. An invoice is a fundamental tool that streamlines your accounting process and helps you make informed financial decisions.
Sadly, inaccurate invoices are prevalent among small and medium businesses (SMBs) across the globe. Here’s a step by step guide to creating accurate, professional invoices that would encourage timely payments.
1. Make Your Invoice Professional
Your invoice should look professional. It should have a sleek design that looks minimalistic yet intuitive. Moreover, it’s essential to maintain consistency.
Every invoice you send, regardless of the client or customer, should follow the same design, pattern, and format. The font, colors, and logo should be consistent across all invoices.
2. Mark Your Invoice as “Invoice”
Ask yourself: is invoice the only document you send to your clients? Maybe there are status reports, results, and a dozen other types of documents you send on a daily basis. If your invoice doesn’t stand out, it could go unnoticed in the clutter.
Make sure your invoice looks different from any other docs you send. Making a slight change, like writing “INVOICE” on the top, can make a huge difference. You can also use different colors to make the document stand out.
3. Include Names and Information
Now, let’s step into the writing part. First things first, add all the necessary details about you and your client. Here’s the information every invoice should have:
- The name, contact details, and address of your company
- The name, contact details, and address of your client or customer
Be sure to provide your company registration number and registered office address.
4. Mention All Goods and Services You’ve Offered
Mention every goods or service you’ve provided to the consumer. Create an easy-to-follow list that mentions all the items.
Also, try to explain the items in detail. You don’t need to write a paragraph for each item, but make it detailed enough so your client can easily understand it. As invoice errors are one of the major concerns for SMBs, it’s better to stay on the safe side.
Also, keep in mind to mention any free items or gifts you’ve provided. Instead of omitting them from the invoice, mention them, and put the corresponding price as “FREE.” This sends out a message that what you offered had value, and you did a favor by providing it for free.
Once you’ve mentioned all the items, add their corresponding quantities and prices. If you’ve offered any discount, specify it clearly in the invoice.
5. Final Amount
Once you’ve listed all the items and their quantities and prices, add them up to a total billable amount. If you’ve agreed to a discount on the total amount, you can mention the detections here. In addition, don’t forget to include any associated taxes or extra charges.
If your invoice doesn’t have a due date, you’ll probably never get paid. Creating urgency is crucial, even when it comes to billing. Every invoice you create should include the following dates:
- The date of issue (the date of invoice creation)
- The supply date (the date you provided items)
- The final due date (the date by which the invoice should be cleared)
- If you’re creating a recurring or interim invoice, add all the dates at which you had supplied the goods or services.
7. Include Payment Terms in Detail
You must have agreed on the payment terms before making the deal. But even so, it’s a good idea to mention payment terms in the invoice. Here are the necessary details to include:
- All the accepted payment methods, such as cash, check, card, online banking, mobile wallet, etc.
- Where to make the payment (bank details, wallet information, etc.)
- Late payment consequences (if any)
- Early payment benefits or incentives (if any)
Creating an accurate invoice is not rocket science. But if you have to send out a large number of invoices every day, relying on pens, papers, and printers is not the best bet.
Manual invoicing has a lot of drawbacks. It’s costly, time-consuming, recurring, and boring. Furthermore, it’s full of hassles and prone to human error. And most importantly, it delays your payments and affects your bottom line.
You can overcome all these hurdles with an automatic billing software solution like MoonInvoice. Here’s how an automated solution can optimize your billing and invoicing process.
- Multiple Invoices: You can create invoices for multiple clients and customers from a single system within seconds. This saves a lot of time and effort.
- Follow-Ups: If your client misses the final due date, you can easily create and send a past due invoice.
- Enhanced Accuracy: A stats summary from Laserfiche showed that 3.6% of all manual invoices have errors. Automatic billing software eliminates human intervention, thereby enhancing the accuracy of your invoices.
- Better Cash Flow: In the end, it’s all about the bottom line. Invoicing solutions enable you to create accurate, timely invoices, which increase your chances of getting paid on time.
It’s scary to see that despite the digitization of accounting operations, most businesses rely on manual, error-prone processes.
Invoice errors can hurt your business, not only from a cash flow point of view but also from a reputation perspective. Therefore, it’s crucial to automate your invoice and billing operations with automatic billing software.
Also, don’t forget to check out MoonInvoice for accurate, affordable, and optimized invoice creation.