Your All-Important Guide to Asking for Payment: Creating the Right Invoice

invoice paid

When you think about it, making a sale is not enough – whilst having as many sales as possible is always a good thing to focus on, the sale is useless (even harmful) if no collection results from it. There’s a natural progression from raw materials to production to sales, and these are all very important steps. Yet often, the last step, the final step, the step that truly closes the transaction, is ignored: proper collection. Here are some useful pieces of advice on how to properly ask for payment and creating the right invoice.

Look professional

An invoice is a message from you to your customer that conveys essential information. Make sure your invoice looks professional so that it will be taken seriously. Your invoice is an official document, after all – one that your customer, your accountant, and the government must recognise as a legitimate legal document. Always aim for clarity and show a professional attitude.

Include all relevant information

A good invoice includes a date, the name and address of the business and other contact information, the name and address of the customer, and a clear indication of who prepared it (signed). As for the items themselves, they are listed in a clear manner (don’t just include a product code – have a name or even short description of the product, if possible), along with the cost of each unit, how many units, and the total amount to be paid. If there are any discounts, mention not just the percentage but the exact amount. Be clear about the exact amount owed and the date on which the payment is due. The customer should have no doubt about the invoice and what it pertains to – no doubt at all.

Deliver it well

Invoices should be delivered in a professional and efficient manner as well. Sending a bill to a customer is not enough – you have to be sure that the right person gets it, at the right address. Almost one third of all customers with unpaid bills or late payments claim they did not receive the invoice, or received it too late. Make sure the customer gets the invoice by following it up, either through telephone, email, or other means.

Don’t give credit without a background check

Some may think it is discriminatory, but it’s only common sense – your bank will not give you any credit without some proof that you are able to pay, either. Especially for large amounts, make sure the customer can provide proof of payment or that they have a sound and reliable track record. Remember, the successful business transaction is only completed when collection has been made.

Remind your customers

It happens sometimes, and every business will sooner or later have to deal with customers who don’t pay or pay only after the allowed term. Make sure you have a good administration that notifies you immediately when it becomes apparent that a customer has breached the terms of payment, and then send that customer a polite reminder – immediately. The longer you wait, the less likely are your chances of collecting.

Collecting payments is a very important part of doing business – the business which ignores this process is not likely to survive. Make your invoices in a professional way, deliver it to the correct person at the correct address, and do what it takes to collect. Only after collection is your business transaction with your client or customer complete. If, however, you don’t want to deal with cashflow problems due to invoice disputes, late payments, and the like, then you can opt for the cashflow solutions provided by firms like Ultimate Finance (www.ultimatefinance.co.uk), which include factoring, invoice discounting, construction finance, asset finance, and more.

 

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

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