Ah... The famous invoicing process. As happy as we may be to invoice, we may have trouble getting paid afterwards.
When a customer is late with an invoice, what can we do to recover the amount due?
This article gives you some invoicing tips to help you collect.
Establish clear payment terms
First invoicing tip: establish clear and precise payment terms. If your customer is not aware of your payment terms, they may not know whether their invoice should be paid immediately or within 30 days of the sale.
Make it a habit to include your payment terms on your invoices, specifying the payment deadline, the interest rate for late payments and early payment discounts, if applicable.
Number the invoices
Numbering your customers' invoices is another way to improve the invoicing process. Without a number, the accounting department may find it more complicated to determine whether a given invoice was produced before or after another one.
Consistent and chronological numbering of your invoices will avoid this problem and help you keep your business accounting records in good order.
Check customer creditworthiness
You probably know your loyal customers pretty well. You know what they buy and their payment habits.
However, you don't know anything about a new customer. Will they pay you on time or pay their bills late?
Checking the creditworthiness of your new customers is another invoicing advice our accountants suggest. Alternatively, you can always ask new customers for a deposit or partial payment if you are unable to confirm their creditworthiness.
Issue invoices quickly
The longer you take to produce and send your invoices, the longer you delay your cash flow. As soon as a sale closes, invoice the customer and send the bill immediately.
If you're always on the go or selling products directly to your customer, consider using a mobile invoicing system, which will let you accept contactless credit or debit card payments with a smartphone while you're on the go.
You can't stop progress.
Forward the invoice to the right person
Did you send your invoice to the right person?
When you invoice a small or medium-sized business, this question usually doesn't arise, since you know the customer well and have a good relationship with them. But when you're dealing with a large company, invoices can easily travel from one person to another and get lost between different departments.
Another invoicing tip is to make sure you send your invoice to the right person in the right department.
This will save you a lot of trouble.
Good invoicing tips for efficient collection of accounts receivable
There you go! With these invoicing tips, you will find it easier to get paid. You'll improve your cash flow and avoid the problems that can arise when collecting a receivable.
Happy billing!
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
