Invoicing tips for every business owner

It’s that time of the month again. After meeting every deadline and delivering great work for your clients, it’s time to submit your invoice and get paid. You’ve already planned how to use that money, perhaps for new laptops, office renovations, or even a family vacation.

You send the invoice and wait. Then, an email arrives: “We’ve reviewed your recent invoice, but we can’t process the payment due to some issues…” Your heart sinks as you read this. You quickly correct the invoice and resubmit it, only to realize it’s Friday. Now, you have to wait until Monday to get paid.

Invoicing may seem simple, but it can be a lengthy process, especially with multiple clients. Mistakes can lead to payment delays and damage your professional reputation. In this article, we will share key invoicing best practices to help you streamline the process, reduce errors, and ensure timely payments. Let’s dive in!

6 Invoice best practices for small business owners

Here are some best practices that can help make your invoicing process more efficient:

1. Establish clear communication

When you onboard a new client, it’s important to communicate clearly about key details. This sets the right expectations and helps avoid confusion later.

Discuss your rates

Be upfront about your rates. Let clients know how much you charge for your services. If you have different rates for various services, explain these as well.

Explain additional fees

If there are any extra fees for additional services, make sure to mention them. Clients should understand any potential costs before they arise.

Set invoice frequency

Clarify how often you will send invoices. Will you bill monthly, or only after completing a project? This helps clients plan their budgets and payment schedules.

Preferred payment method

Inform clients of your preferred payment methods. Whether you accept credit cards, bank transfers, or online payment platforms, let them know what works best for you.

Include basic company details

Make sure to provide basic details about your company that should appear on the invoice. This includes your business name, address, and contact information.

Clients often process payments at fixed times, like the end of the month. They may be busy handling payments for other freelancers or agencies during this time. By discussing these terms early on, you can prevent last-minute questions that could delay payments.

Clear communication shows professionalism. It makes it easier for clients to pay you without unnecessary back-and-forth. When clients know what to expect, they are more likely to pay on time.

2. Format your invoice simply

When creating invoices, clarity is key. Your clients care most about a few important details:

 

Make sure these elements stand out so that clients can easily find them without spending too much time searching.

To ensure maximum readability, follow these simple formatting tips:

Use one font: Stick to a single font throughout your invoice. Sans-serif fonts are recommended because they are easier to read in business documents.

Highlight key information: Use bold or italics for important details like pricing, the invoice date, and your banking information. This draws attention to the most critical parts of the invoice.

Create clear tables: If you include a table for services and pricing, make sure it has enough space between items. Avoid cramming too much information into a single column.

Organize layout: Since people typically read from left to right, place key information, such as charges, on the right side of the invoice. This makes it easier for clients to see what they owe.

Use simple language: Choose easy words that are simple to read and understand. To check if your wording is clear, read it out loud.
If you struggle with any words, replace them with simpler alternatives. You can also use free text-to-speech tools to listen to your text.

Avoid extra information: Keep your invoice focused on essential details. Don’t overload it with unnecessary information like company history or promotional messages, as this can distract from the main purpose of the invoice.

By formatting your invoices simply and clearly, you enhance readability and make it easier for clients to process payments promptly. This professionalism helps build trust and encourages timely payment for your services.

3. Send invoices on time

Money is a sensitive topic for any business. Sending accurate invoices on time helps your clients manage their finances better. For example, if your client processes all invoices mid-week, receiving yours on schedule allows them to handle everything efficiently at once.

If you miss the deadline and submit your invoice late, it creates extra work for your client. They may have to manage your payment separately from others, which can disrupt their workflow. While this might seem like a small issue, consistently missing invoice deadlines can damage the trust your client has in you.

To secure future work, it’s crucial to show clients that you keep your promises. Timely invoicing demonstrates professionalism and reliability. If you have a team, make sure they prepare their invoices ahead of time. This way, everyone can meet deadlines and maintain a smooth invoicing process. By sending invoices on time, you strengthen your client relationships and improve your chances of getting repeat business.

4. Consider invoice automation software

As your business grows and you take on more clients, managing invoices can quickly become overwhelming. Imagine having over 25 clients and needing to fill out invoices for each one regularly. Each client may have different payment deadlines and time zones, making it difficult to keep track of everything. This manual process can consume a lot of your time and resources.

Human errors are also a risk in manual invoicing. Clients might receive incorrect or misplaced invoices, leading to confusion and delays in payment. To address these challenges, it’s worth considering invoice automation software.

Invoice automation software can simplify the invoicing process significantly. These tools allow you to automate many aspects of invoice creation. For instance, you can schedule invoices based on each client’s specific deadlines and track unpaid invoices from a central dashboard.

Some common features of invoice automation software include:

Recurring invoices: Automatically send invoices to regular clients at set intervals.

Multilingual invoices: Create invoices in different languages for international clients.

Quote conversion: Easily convert quotes into invoices.

Custom branding: Add client company logos to their invoices for a personalized touch.

Multiple templates: Use various invoicing templates to meet different client needs.

If you only manage a few clients, manual invoicing might be manageable. However, as your business expands, using invoice automation software can save you significant time and reduce the likelihood of errors. This approach can lead to smoother operations and more timely payments.

5. Information every invoice must have

Every invoice, regardless of the industry, should include certain key elements. These elements ensure clarity and help with organisation.

First, the word “Invoice” should be clearly stated at the top. This makes it easy for clients to recognise the document and helps them file it correctly in their financial records.

Here are the essential details every invoice must have:

Invoice number: Each invoice should have a unique number. This helps you and your client track payments easily.

Invoice issue and due date: Clearly state when the invoice was issued and when payment is due. This helps avoid confusion about deadlines.

Client company’s address: Include the full address of the client’s business. This ensures that the invoice reaches the right place.

Your business’s address: Your own business address should also be included. This provides clients with your contact information.

Your rates: Clearly list your rates for services or products provided. This transparency helps clients understand what they are paying for.

Client company’s business name: Make sure to include the official name of the client’s business on the invoice.

Your business name: Your business name should be prominently displayed so clients know who issued the invoice.

Client company’s logo: Including the client’s logo can make the invoice look more professional and personalized.

Payment terms: Clearly outline your payment terms, including any late fees or discounts for early payment. This sets clear expectations for payment.

While these details may seem basic, many people forget to include them, leading to delays in payment. Using templates or invoicing software can help ensure that all necessary information is included automatically for each client.

The last thing you want is to have your invoice sent back due to simple errors or missing information. By including all these key elements, you can streamline your invoicing process and reduce potential issues with payments.

6. Keep track of late or unpaid invoices

According to a 2024 survey, small business owners in Australia lose between $12,000 and $30,000 each year due to late payments. This loss can significantly impact your business’s cash flow and overall financial health.

It’s important to understand that letting unpaid invoices slide can add up quickly. If you ignore these dues, your hard work may end up feeling like charity.

There is nothing wrong with following up on unpaid invoices. Often, clients misplace invoices or forget to pay due to their busy schedules. Relying on clients to notice and contact you about unpaid invoices is not a realistic approach.

To manage this issue effectively, keep track of your unpaid invoices. You can do this manually using Excel or by utilizing invoice automation software. Regularly reviewing your accounts receivable will help you stay on top of payments and ensure that you follow up promptly when necessary. This proactive approach can help reduce the number of late payments and improve your overall cash flow.

6 Tips for streamlining invoicing in professional services

In addition to best practices, here are some quick tips to help you streamline your invoicing process:

1. Notify your client after submitting your invoice

Notifying your client after you submit an invoice is crucial, especially if they are a first-time client or if the invoice amount is significant. Clients may not always check their email regularly. They might also be busy or unavailable to see your invoice in their accounting software.

In these cases, it’s helpful to reach out personally. Use professional communication channels like Slack, Discord, or other messaging platforms that respect their personal space. This approach ensures that your invoice gets acknowledged and shows that you are proactive about your work.

A simple message can go a long way. You can say something like, “Hi [Client’s Name], I just sent you the invoice for [service provided]. Please let me know if you have any questions.” This not only confirms receipt but also opens the door for any discussions about the invoice. By taking this extra step, you help ensure timely payment and maintain a good relationship with your client.

2. Always cross-check your banking details

Getting paid is the main purpose of your invoice. If your banking details are incorrect, clients won’t be able to pay you. This can lead to delays and frustration for both you and your clients.

To avoid this issue, always cross-check your banking information before sending out an invoice. Make sure that your account number, bank name, and payment method are all accurate. A simple mistake can cause significant delays in receiving payments.

If you have recently changed your bank or payment method, it’s even more important to verify these details. Inform your clients about any changes to ensure they have the correct information. This proactive step helps prevent payment issues and keeps the invoicing process smooth. By taking the time to double-check your banking details, you can ensure timely payments and maintain a good relationship with your clients.

3. Set clear overcharging expectations

Client needs can change frequently. As business conditions improve, you may find yourself taking on more work than initially discussed. For accountants, this might mean additional tasks like extra financial reports, tax filings, or bookkeeping services that go beyond the original agreement.

At first, these requests may seem small, and you might be willing to handle them without charging extra. However, as these “small” tasks accumulate, they can take up significant time and resources. This is why it’s important to communicate extra charges for additional services right from the beginning.

One effective way to set clear expectations is to offer your services in packages. Packages can outline what is included and how additional charges will apply if the workload exceeds what was agreed upon. For example, you could create service bundles for accounting services like this:

Basic package: Monthly bookkeeping for up to 50 transactions, one financial statement, and additional transactions at $1 each.

Standard package: Monthly bookkeeping for up to 100 transactions, two financial statements, and additional transactions at $0.75 each.

Premium package: Monthly bookkeeping for unlimited transactions, quarterly financial statements, and additional reports at $50 each.

Make sure to clearly mention any extra charges in your invoices. You can include them in a separate line item or highlight them in a designated section. This transparency helps clients understand the costs involved and prevents any feelings of being overcharged or misled. By setting clear overcharging expectations from the start, you foster trust and maintain a positive working relationship with your clients.

4. Document & backup your invoices

It is essential to create a backup of your invoices before submitting them. This practice can benefit your business in several important ways.

First, having a backup helps you avoid legal troubles in the future. If a client disputes a charge or claims they never received an invoice, you will have proof of the transaction. This can protect your business and provide clarity in case of any disagreements.

Second, backups help you manage and track your finances more effectively. By keeping records of all invoices, you can easily see what has been paid and what is still outstanding. This information is crucial for maintaining a healthy cash flow.

Third, having copies of your invoices makes it easier to calculate your taxes. You will need accurate records of your income and expenses when tax season arrives. Backing up your invoices allows you to gather this information quickly and accurately.

Finally, maintaining a history of client transactions is valuable for future reference. It helps you understand your relationship with each client and track their payment habits over time. This information can inform your business decisions and improve client management.

5. Choose the correct invoice type

If your business offers various services, it’s important to use different invoice types for each one. This helps clients understand what they are paying for and makes the invoicing process clearer.

For instance, if you provide content writing services, your invoice should focus on key details like word count and any revisions made. This way, clients can easily see how the charges relate to the work completed.

On the other hand, if you offer video editing services, your invoice should highlight hours worked and specific edits requested by the client. This ensures transparency and helps clients understand how their payment corresponds to the services rendered.

Using the correct invoice type for each service not only improves clarity but also enhances professionalism. It shows clients that you are organised and attentive to their specific needs. By tailoring invoices to reflect the nature of each service, you can reduce confusion and encourage timely payments.

6. Add a thank you note

Including a “thank you” note in your invoice is a simple yet effective practice. Most clients may not notice when you add this note, but they will likely notice if it’s missing. A thank you note adds a professional touch to your communication.

If you want to build a long-term relationship with your client, expressing gratitude shows that you value their business. It demonstrates that you care about more than just getting paid. A simple one-liner can be enough, such as: “Thank you for your business; we appreciate your trust and collaboration.”

Make sure the thank-you note is brief and does not take up too much space on the invoice. This way, it enhances your professionalism without cluttering the document. Overall, a thank you note can leave a positive impression and strengthen your client relationship.

Conclusion

Making your invoicing process easier is crucial for receiving payments on time and maintaining strong relationships with clients. An efficient invoicing system helps ensure that clients understand their obligations and feel confident in your professionalism.

By following these best practices, you can reduce mistakes in your invoices. A well-organised invoice not only looks more professional but also helps clients process payments quickly. Clear communication about payment terms and expectations can prevent misunderstandings that lead to delays.

Remember, effective invoicing is essential for the success of your business. It contributes to steady cash flow and fosters trust with your clients, which is vital for long-term partnerships.