Money fuels every business. No matter how many deals you close, or how many products you deliver at the end of the day, you want money to keep your business going. After fulfilling a client’s requirements, collecting payment is a major challenge. In case you make mistakes in invoicing, god forbid, your payment may get stuck. To prevent this, you need to create error-free invoices. In this blog, we are going to discuss the most common invoicing mistakes that people make. So let’s start!
Top Invoicing Mistakes To Avoid Anyhow
Following are the common invoicing mistakes that people make:
Mistake #1: Not Specifying Payment Mode
If you do not specify payment mode clearly then a customer will have no way to go. You may communicate the same via phone call before sending an invoice but you must mention it on the invoice because there is always a chance of misunderstanding.
Mistake #2: Not Providing Multiple Payment Options
There might be a case where a customer is unable to pay your invoices via the mode which you asked for. To avoid this, it is best to communicate beforehand. A business should provide multiple options to make payment, especially when dealing with international clients, or else get ready to bear with opportunity loss.
The following are the benefits of offering multiple payment options:
- Maximize conversion
- Minimizing opportunity loss
- Hassle-free payment process
- Catering to all the segments of customer
Mistake #3: Incorrect Customer Details
One of the major mistakes an accountant makes is sending invoices to the wrong person. It’s very important to know who’s handling payment processing authority in your customer’s company beforehand, sending an invoice to the wrong person will tarnish your brand image and they may judge you as disorganized.
Important: In India, it is mandatory to mention clients’ GSTIN when the nature of the transaction is B2B. Before sending an invoice, always double-check GSTIN to avoid any financial litigation.
Mistake #4: Double Invoice Issue
During the invoicing process, sometimes accountants send an invoice to a customer twice due to minor errors in it. As a result, customers get puzzled and they may not have a clear understanding of making payments because they are unaware of billing errors. In such a case, they delay payment unless you personally clarify everything which can be embarrassing.
Mistake #5: Sending Invoice Lately
When a client’s requirement is fulfilled send the invoice right away. Don’t expect the customer will remind you. Nobody does. It is your responsibility otherwise unpaid invoices will pile up.
The sooner you send the invoice, you can expect to receive payment faster. So kindly don’t wait for month-end or to restart their billing cycle, once you get the order confirmation invoice should be released from your end.
Mistake #6: Calculation Mistake
The calculation is one of the most commonly seen mistakes in invoicing. It may sound silly but this is what it is. When you have to add multiple times with different prices and varying discounts, mistakes are natural. After all, we are not calculators.
If you want to mitigate this mistake then you should start using invoicing software like Munim – online accounting software. It will calculate the total by itself with varying discounts, all you have to do is feed the right data.
Mistake #7: Not Itemizing Offerings Clearly
Customers want to know what they are paying for. To have a clear understanding, clear itemizing of the offering is required. Oftentimes, customers ask for the same for recordkeeping, tracking, and report procurements.
So, make it a habit, regardless of the client and also, your business reputation enhances. After itemizing, you won’t receive emails seeking further clarification and payments will get cleared timely.
Mistake #8: Not Taking Follow Up
So here’s the story: you sent an invoice to a customer, and even after two weeks he hasn’t paid. This has happened to you, right? If we are not mistaken. If you would have taken follow-up, the story could have been different.
Clients forget to pay due to some or other reasons, it is your responsibility to remind them. You’ll find some clients who won’t release payment until you nudge them frequently. Hence, follow-up is necessary to expedite unclear dues.
Mistake #9: Not Specifying Due Date
You must mention the due date of payment clearly otherwise you will end up taking a follow-up day-in-day-out. Never ever send open invoices or invoices with vague payment terms.
Here is an example for you:
Kindly release the payment as soon as you receive the invoice.
You should write: Kindly release the payment within X number of days. Or else you mention a specific date.
Mistake #10: Including Unexpected Fees
Nobody will pay you when you add a surcharge for no reason. If there’s a situation where you need to work beyond the agreement, communicate with the client before starting that work and most importantly before invoicing. It can hamper the reputation of your business adversely.
How Munim Can Help You Dealing With Invoicing Mistakes
So these are the common invoicing mistakes the account person makes. If you ever come across such mistakes in business then it is a sign that you need cloud-based invoicing software like Munim. With Munim, you can create a dozen invoices in just a few minutes, without any errors. Moreover, you can use Munim – best accounting software in india for small business for bookkeeping, inventory management, and whatnot! Since you have read this article fully, we have a reward for you: Get a free trial of Munim for 60 days, no credit card is required.
What should an invoice contain?
An invoice must contain the name of the client, contact information, date, product/service description, price, quantity (in case of goods), discounts (if any) and the total amount to be paid.
What is a ghost invoice?
The ghost invoice is an invoice generated against the goods/service which is neither ordered nor delivered. It is sent by scammers, hence you should never acknowledge it.
What are the types of invoices?
Following are the different types of invoices:
- Performa invoice
- Sales invoice (regular invoice)
- Overdue invoice
- Consolidated invoice
- Retainer invoice
- Interim invoice
- Timesheet invoice