Any business that offers any goods or services in exchange for monetary compensation will also have to be in the business of sending invoices that request payment for said services either partially upfront like a deposit, during the process in installments, or upon full completion of the job or receipt of the goods. An invoice is a notice, either written or electronic, that details services billed for services rendered. It informs the recipient of any financial burden and specifies payment terms for those services or goods.
An invoice is usually a numbered, dated document that helps a purveyor to get paid for work accomplished. An invoice usually resembles a spreadsheet of columns including the name and contact information of both the buyer and seller. Along with the description of the services or goods rendered, the cost per item and the total amount due is noted. Invoices typically include a payment date and the preferred method of payment.
How to Invoice for Better Outcomes
When it comes to private, self-employed, or small business transactions between individual parties, it is not uncommon for payment to be rendered for services immediately upon receipt of goods or services like in the case of retail and restaurants. Yet, it can be challenging for independent contractors and solo entrepreneurs to extend the usual weeks or months to every business to pay at their convenience. So the question is, how long should you give a client to pay an invoice? Generally, payment terms would be specified in a contract, agreed upon in advance, and clearly understood by both parties before the work begins.
One of the biggest accounts receivable questions is regarding the amount of time that any purveyor should give a client to pay an invoice. There are some business basics about how and when to invoice a client for achieving both smooth relationships and a healthy income flow. Most businesses ascribe to the unwritten rule of allowing 30 days, otherwise known as Net 30, for an invoice to be paid after goods or services are provided.
While in most countries including the US, Net 30 is the most common invoicing terms used by all sizes of businesses, it often does not work for smaller companies that are strained by having to wait for payment. It also brings up questions such as, is it 30 days from receipt of the invoice or from receipt of the goods? Regardless of how long you offer a client to pay an invoice, being clear about your expectations ahead of time can help minimize any chance of misunderstanding when payment time arrives.
When to Invoice
Invoice payment terms should be spelled out in your contact and negotiations before work even starts on any project, though most business owners tend to neglect hammering out the finer details of any contract, preferring to hand-shake their way through a business exchange. However, a written contract is helpful to protect both parties in any transaction. Invoice terms should include things such as the form of payment that is acceptable, late-payment penalties, and the due date that payment is expected.
Whether a specific date of payment has been arranged or you bill with an invoice after services have been rendered, it is important for you to make it easy for your clients to pay their bill. In order to cultivate strong client relationships, it is important to be clear, firm, but friendly, and organized in your efforts to secure the settlement of debts in a timely manner. Some of the most common failures in communication occur when you forget to invoice, send an invoice to the wrong department, or send an incorrect invoice with errors that will take time and resources to remedy.
Keep in mind, the extension of 30 days of interest-free credit is a courtesy that you are offering your clients at your own expense. It is understandable to want to be paid in a timely manner for your services or goods. But the burden is on you to perform when it comes to providing the right environment for healthy business revenue flow to occur in your company. It goes without saying that accounts receivable is usually a costly area of any venture.
Top 5 Ways to Get Paid On Time
Whether Net 15 or Net 90, getting paid on time can come down to following a few key steps. From including proper details on a contract to invoicing on-time, there are ways that you can go about invoicing that will ensure faster payment. Here is some advice to help keep you on track when it comes to invoicing and getting paid on time:
1. Use a contract for every job, a receipt for every transaction, a purchase order for every purchase, and an invoice for every client transaction. Always make sure to include the following details on any contract and invoice:
- Company name, phone number, email, and website, and tax ID number
- Business address and mailing address, if different
- Client’s name and address, if different
- Invoice number (specific to each job/client), invoice date, and the due date
- Payment terms (payment forms and methods)
- Itemized list of goods or services that you provided (hourly rate, cost per item)
- Any legal disclaimers
2. Offer incentives for advance, early, installment payments throughout the process, or upon delivery of goods.
Getting paid upfront is the best way to ensure that there are no misunderstandings when it comes time for payment. Yet, many people are hesitant to pay for something until they receive it at least. In that case, you will need to offer payment terms in the standard options such as Net 15, Net 30, Net 60, or Net 90 days. Offer discounts or rebates for those that are willing to pay in advance or at delivery.
3. Make sure your invoices are correct, easy to read, and easy to pay.
Don’t allow errors in your accounting, printing quality, or payment process to hinder a client’s ability to pay quickly and easily without having to contact you for clarification on anything. Make sure you offer more than two methods of payment such as online credit card, phone-in payments, or monthly auto-debit, if appropriate, as well as mail-in check options.
4. Invoice (the correct person and department) on time, frequently, and send friendly reminders in a timely manner to follow up.
Make sure you don’t lag in your diligence in sending invoices right away when you finish a job or deliver goods. Studies have shown that invoices that go out right away upon completion rather than ones that are sent within 2 weeks later are 1.5 times faster. Failure to send invoices in a timely manner will not only hurt your finances but your reputation in the community. You can’t complain about not being paid on time if you fail to make invoicing a high priority.
5. Enforce late payment fees.
Whether you have lined out a flat fee for lateness or an interest-based late-payment fee schedule, it is important to enforce your late payment fees with consistency. Make sure to discuss these fees in the contract and verbal negotiations and encourage your clients to pay on-time. A late fee or interest fee monthly to your client as balances are carried by you is fair and will serve to motivate your client to pay in a timely manner.
How Can Towne Mailer Help?
Towne Mailer has over 20 years of experience helping businesses just like yours to send timely invoices to your customers. Using our state-of-the-art printing and mailing equipment in a 7,000 square foot facility located in Missoula, MT, we have mastered the art of producing the highest quality printing and the fastest mailing services in the industry. Serving clients all over the country, we specialize in creating perfect printing and mailing solutions for sending invoices, bills, statements, and much more.
Our easy-to-use online system will allow you to upload a test file to our server. Shortly thereafter, you (?) will post samples for your review and comment. Upon approval of the documents, we guarantee that it will be printed and mailed to your clients within 24 hours. We do our part to make sure that your clients get easy to read, up-to-date invoices right away so that you can always get paid on time. When you work with Towne Mailer to help streamline your accounts payable processes, you not only get a printer, you gain a partner.