Running a successful business involves attracting customers and retaining them by supplying them with products and services they love. Another crucial part of maintaining an excellent cash flow is sending invoices to collect payments. But sometimes, businesses find that they are missing some important information on their invoices even if they have been operating for years!
Ineffective invoices can lead to overdue bills, and when this happens, you risk running your business inefficiently and hurting your working capital ratio. These things, in turn, can threaten your company’s survival. An effective invoice is essential to receiving timely payments.
Follow the steps below so you can be guided on what to include on your invoices.
1. Create a professionally designed invoice
First impressions matter. To establish greater credibility, come up with a professionally designed invoice by adding your business logo, easy-to-read fonts, and colours that reflect your brand. Familiarize yourself with proper design elements and strategically place them in your invoice. If you lack the background in good design, consider using accounting software platforms that let you create invoice templates or hire skilled designers to ensure the quality of your invoice design.
2. Label your invoice properly
Place the word “invoice” clearly at the top of your document and use the words “tax invoice” if needed. Don’t forget to add a unique identification number for your own records to avoid having duplicates and ensure you have a reference for all your invoices. Look for a quality accounting software platform or work with reliable eCommerce accountants to create identification numbers that reflect specific clients.
3. Add your company information
Incorporate your company’s complete details and the company or client you’re invoicing. Include your company’s name, address, and contact information as well as your client’s company name and address.
Place your registered office address and company registration number on your invoice if you’re a limited company and add your customer’s name, address, and contact number if you’re invoicing an individual. If you’re invoicing another company, don’t forget to incorporate a contact’s name to ensure that it reaches the right person.
4. Write a comprehensive description of your products or services
Add a comprehensive description of the products or services that you’re charging for, including the quantity and the price. While it doesn’t have to be too descriptive, it needs to include enough detail to let your client know about the exact goods they have to pay.
5. Include important dates
Supply the date you provided your products or services and the date you created your invoice. These dates should be at the top of the document along with your company’s details, such as your business name, address, and contact information. You can also add the supply date together with the description of items you sold.
Conclusion
Collecting effectively on your accounts receivable and pursuing outstanding invoices is essential in generating healthy cash flow, and the way you create your invoice affects it. Prepare an effective invoice and get paid faster by following the step-by-step instructions in this guide. You can also seek help from a trusted eCommerce accounting firm like ours for further assistance.
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