Keep the Money Coming in By Invoicing Promptly and Clearly

You got into business to make money, not to create paper trails around it. But those paper trails between what you buy, from whom, and for how much, are the backbone of your supply chains and expenditures. Invoicing isn’t fun, but it is necessary.

Follow this guide to solid invoicing practices.

Comparing Vendors Later

If you’re a business owner who doesn’t occasionally block out an hour or two to drag out old invoices and compare what you’re paying to other market prices of what you could be paying, you probably shouldn’t be in business. Invoicing is the Maginot Line of your defense against unnecessary costs. Memories fade, but a good invoicing system remains. If present-you settles for invoicing that is unclear, muddled, or incomplete, future-you will wish you had done it right.

Credit and Supply Lines

Bad invoicing leads to mistakes in the single most important part of your business – the place where money changes hands. Enough mistakes – even with friendly vendors – will inevitably lead to problems with credit, problems with supply lines, or both. Credit and chain of supply are the lifeblood of business. Those invoices you’re neglecting are more than just paper – they’re contracts and obligations that must be taken seriously.

Your Reputation Will Suffer

This is a “will,” not a “could.” When it comes down to it, every industry is a pretty small fraternity – and people talk. Just as you know a lot of people in your business, your vendors all know a lot of people in their business, and a lot of people in your business share the same vendors as you. If you’re inconsistent, inaccurate, and unreliable with invoicing, by definition, you’re difficult to work with.

In his landmark book The 48 Laws of Power, author Robert Greene explains that Law 5 is: So much depends on reputation – guard it with your Life. Never is this truer than in business.

You’re Making More Work for Yourself

Like anything else, when you let invoices back up, it creates a much larger and less manageable job that is much more open to mistakes. If you have a mountain of invoices, they’re less likely to be organized and filed correctly, and they add to a general sense of havoc in your office.

Record Keeping

Your business should keep records dating back at least seven years. Seven years is a lot of time. Your invoices are a bread-crumb train of your business’s most basic finances. Shoddy invoicing now will lead to a catastrophe when you inevitably need to dust off your old records in the future.

Get the Right Software

Whether you’re looking to clean up your invoicing act or to get a fresh start on a new venture, the best thing you can do is get good, reliable software. The question then becomes: Which software is best? The answer is the software that meets all of your needs, but only your needs.

There is a common misconception that more expensive is better, that it’s better to splurge on the best software you can possibly afford. The more expensive and thorough the software, the steeper the learning curve and the more complex and difficult it becomes to operate. This means you’re less likely to keep up with it, and you’ll be right back where you started: with untimely, unclear invoicing.

The Basics

No matter what your size, you’ll need to create invoices with simple time-saving features such as auto-fill, email sharing, and the ability to produce both PDF and HTML files. There will need to be a basic record-keeping mechanism and email alert that lets you know when something is coming up to past due.

Difficulty

This increases with price and software sophistication. If you’re not an accountant or don’t have advanced bookkeeping skills, don’t overload yourself with more software muscle than you need. Don’t presume that because you’re good with numbers, you’ll be able to figure it out. Ease of use is one of the most important keys to good software.

Customer Management

If you can afford it, look for software that specializes in saving basic client information such as payment history, addresses, contact information, names, email addresses, and products most ordered. Look for software that allows you and your suppliers to exchange notes right on the invoice file before a final copy is made.

Payment and Billing Options

Still fairly basic, most software comes with the ability to follow up post-invoice and track past-due accounts. Also, you’ll want to be able to accept multiple payment methods and record and compartmentalize partial payments, credits, and down payments.

Customer Service

Being able to get a knowledgeable, actual human being on the phone when you run into the inevitable snare may be the most important part of any complicated software. When snags happen, they usually happen when you can afford them least. Reliable, off-hour customer service is key to any good software.

The Extras

If you have tangible, physical inventory, shipping and inventory software can be integrated with your invoicing software. Also look for invoicing software that is integrated into your payroll software. You’ll thank yourself at tax time. Software that includes bookkeeping and accounting software may not be necessary if you can integrate your invoicing program with your current office program.

Invoicing is tedious, time consuming, and absolutely necessary. Doing it wrong can sink a business and create ripple effects that create problems from which you may not be able to bounce back. Get your invoicing right the first time – do it right and do it on time, every time.


Andrew Lisa is a freelance writer living in Los Angeles. He writes about business management and reviews invoice software.

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