If at least a third of your receivables are 60-plus days delinquent, you’re not alone. In fact, you’re one of 40 percent of small businesses in that predicament–and your invoices may be partially to blame.
Incomplete, incorrect or unclear invoices could be sent back or remain unpaid until questions about them are answered, according to Flint Lane, founder and CEO of online billing company Billtrust, based in Hamilton Township, N.J.
Before you issue your next invoice, be sure all the parts are complete.
1. Seller info: The source of the invoice should be clear and include your company’s name, address and telephone number. The latter is important so the customer can immediately call with questions about the bill. If there’s a separate number for customer service, include that, too.
2. Customer info: Be sure your invoice includes your customer’s full company name and address. It’s also a good idea to note the individual contact who placed the order or authorized the purchase with your firm in case there are any questions about the invoice.
3. Invoice number: Generate individual invoice numbers not only for your own accounting purposes, but also to help customers find the correct document and track it through their bookkeeping systems.
4. Date and terms: The invoice should have a clear date of issue and note the terms of payment. For example, the invoice may be due in 30 days or may be paid at a 1 percent discount if remitted within 10 days.
5. Quantity, description and price: Each invoice line should state the quantity of goods or services purchased, whether it’s a case count of items or the number of hours billed; also include the per-unit price. Alternatively, state if the customer is being charged a flat rate for services or for a bundle of goods and services. If the invoice is related to a purchase order from the customer, include the number of that order.
6. Tax, handling charges and other add-ons: Any taxes, fees, handling charges and other additions to the invoice should be clearly itemized. The invoice should also have a total of all line items at the bottom with a notation to indicate that number is the total sum owed.
7. Tax ID: For some operations, such as child-care agencies or nonprofit organizations, it is customary to include a tax identification number (TIN) on invoices.
8. Make it even better: Consider adding a message box to your invoice template. There, you can thank customers for their business, note important account information or include details on seasonal promotions.