In our November and January newsletters, we talked about perfect customers and perfect orders, and how they can boost the quality of your new sales leads. That hard work should be paying off now, in the shape of good-quality, low-risk clients who pay on time! There is always more we can do to keep the cash flowing, however, and the next step is to make sure we invoice those clients promptly and precisely.
The perfect invoice is raised against the correct company, as soon as the work is completed and is sent out the same day. It is accurate, reflecting the value of the goods or services, provides a detailed product description and shows the customer’s order reference.
Get the timing right and you could bring forward payments by up to 30 days. If your invoice process seems sluggish, then now could be a good time to review it:
Are invoices being raised as soon as the work is done?
Are they sent immediately?
Is it possible to send them by email instead of post?
Could invoices be raised on the 30th of the month instead of 1st of the following month?
• An invoice can’t be paid until it has been received
• An invoice won’t be paid if the wrong legal entity/address is quoted
• A disputed invoice won’t be paid
Company A sent out invoices which just said “client services” and the price. They also had 7 day terms but it took 2 weeks to physically get the invoices sent out.
Payments arrived within 30 days at best, the customer’s attitude was, “if they can’t send it on time, we can’t pay it on time
Company B sent out maintenance invoices stating “monthly contract” with a price to multi-site clients. Payment was delayed because the accounts team needed to establish which site had which service before they could pay
Company C sent annual contact renewal invoices out on the 1st of the month. By changing the date to the last day of the previous month, payments were made up to one month earlier as they fell into the previous accounting month.
Invoice Check list at a glance
Paying attention to detail ensures that your customer has all the information needed to pay the invoice promptly and avoids costly delays. The perfect invoice includes:
Your company details – business registered address, VAT & company registration numbers
The client’s details – company name (correct legal entity), ‘bill to’ & delivery addresses
Your reference – unique invoice number, account reference, invoice and due dates
Client’s reference -purchase Order number or other customer reference
Description of Goods and Services – As brief as possible, without losing detail: where? What? when?
Price – unit price, total amount and tax
Clear payment instructions – bank details, cheques ‘payable to’ details, other payment options e.g. Paypal/credit card
Clear payment terms – e.g. 30 days from invoice date, 30 days net
Credit, like the honour of a female, is of too delicate a nature to be treated with laxity – the slightest hint may inflict an injury which no subsequent effort can repair
The Morning Chronicle, 1825