3 Important Invoice Management Tips for Small Businesses
Dealing with invoices might be among your least favourite tasks, but when you’re a small business owner, it’s one of the most important. Good invoice management encourages regular cash flow, eases accounting woes and saves you time. So you’ll want to make sure you have a simple strategy for generating, sending and keeping track of them.
Find out how to get a handle on invoices so that you can get back to work.
Choose the right type of invoice for the job.
There’s no one-size-fits-all invoice template — different payment plans work for different projects. So before you begin the work, talk to your client or customer about a payment schedule that works best for both of you and make sure you agree upon one plan. Here are some options to consider:
Interim invoices: Instead of paying you in one lump sum, your client or customer can pay you in a series of recurring smaller payments, such as monthly installments or as you complete various sections of a project. If you opt for interim invoices, you should also send a final invoice at the end of the project detailing the work that’s been completed and what you’ve been paid.
Recurring invoices: For ongoing projects for the same client, it may make sense to send recurring invoices at regular, agreed-upon intervals (for instance, weekly or monthly). Getting on a schedule makes sending invoices part of your workflow and, with any luck, your clients will also get in the habit of paying you on time.
Final invoices: At the conclusion of a project, send a final invoice to outline the work that you have completed alongside any interim invoices that have already been sent. Detail whether those interim invoices have been paid and list the final amount that is outstanding (if applicable). Even if the job has been paid in full, send a final invoice to wrap business up between you and your client.
Manage invoices online.
A quick way to reduce headaches and streamline your invoicing process is to eliminate paper from the equation. Paper invoices have a way of piling up (for both you and your clients) — they’re a headache to manage, and it’s easy to lose track of their status.
With Square Invoices, you can check the status of every account from your computer or mobile device on your Square Dashboard. You can also send invoices from your mobile device and your customer won’t be charged a fee to pay.
Avoid common delays.
Even if you use online invoices, send your invoice right away and agree on a payment schedule, there are some other common barriers to getting paid on time. Here are some issues that could slow down your payment:
You sent the invoice to the wrong person: The project manager or primary contact might not be the person who deals with accounting, so before you deal with lengthy back-and-forth communications (further delaying your payment), find out where exactly you should send the invoice.
Luckily, Square’s invoicing software makes it easy to make edits to past invoices. Editing, canceling and resending existing invoices can be done right from your Square Dashboard or in the app on your mobile device.
You weren’t clear about terms: If you think the invoice should be paid within a month, and the client thinks that it doesn’t have to be paid until the completion of the project, you’re in trouble. To avoid an uncomfortable and frustrating situation, make sure your client agrees to your terms (in writing) before you begin work. You might also consider setting a shorter payment window or initiating automatic invoices to ensure timely payment. You can also use the “custom text” feature in Square Invoices to clearly state your payment, cancellation and refund policies.
You sent the invoice on an inconvenient day: Clients are least likely to pay an invoice they receive on a Sunday. But when you send an invoice on a Thursday, you have the highest likelihood of being paid within two days. Determine a payment schedule that results in the speediest payment from your clients.
- Five Ways Invoicing Apps Help You Get Paid Faster
- What is Cash Flow
- Invoice Examples for Every Kind of Business