As a business owner, you may think invoicing is a straightforward process that does not require your full attention or human intervention. You need to issue error-free invoices for your business to grow and reap profits.
Even if you know that an accurate invoicing process is necessary to maintain a positive cash flow, simply informing your clients about the amount they owe your business isn’t going to work. Besides, it is unprofessional and wastes resources. An error-ridden invoice confuses the customers, and this delays payments. It further damages your brand’s reputation and creates a dent in your client’s base. But the good news is the errors that render invoices invalid can be fixed easily. To fix invoicing issues, you need to know what makes an invoice invalid after issuing them to your customers.
Manual or paper invoices take longer to process and deliver and are prone to errors, inaccuracies, and duplication. They’re also more likely to get lost during the delivery process. When your client receives an error-ridden invoice manually, it becomes void.
Fix a mistake on a manual invoice by crossing out the wrong information and writing in the correct numbers. When crossing out these mistakes, remember to use a correction pen to cover the errors before writing over them. Since using a correction pen or simply crossing over the mistakes makes your business invoice look unprofessional, start over with a new invoice paper.
Keep a copy of the previously discarded bill if you number your invoices to help document the sequence difference. After correcting the bill, send it to your customer along with a note explaining the reason for the correction. For reference purposes, keep both versions of the invoice.
Using accounting and invoicing software eliminates these manual invoicing issues. The software sends and delivers invoices to customers automatically. It makes your business processes more efficient and streamlined. You can customize templates for each customer.
Electronic invoicing systems are also a cost-effective way to track invoicing and payments. It is perfect for sending automatic reminders for bill payments.
Even if you understand the language and terms included in the outbound invoices, you should check to see if the recipient can easily understand the language. For example, you may state the actual payment deadline using ambiguous terms like “due by first date,” or “pay by first working day”, which may confuse your customers. When they don’t understand the terms, they would either discard the invoice or interpret it as they deem fit.
It gets complicated and cumbersome if you sell several related and unrelated products and services to the same client and send bill notifications to them at different times. These issues would render invoices invalid after issuing them to customers.
Solve this issue by being as straightforward as possible. State your terms explicitly and use invoicing languages that are easy to understand, such as using actual job quotes, descriptions, the exact purchase order, and other related titles and documentation. Format the bills so that all the information your client needs is easy to find just by scanning the documents.
By making these simple adjustments, the bills would not be rendered void upon receipt, the payment process would go more smoothly, and you get to avoid paper and data wastage. Your accounting department and customers will be happy, too, since they understand what the invoices contain.
For your business to have access to a constant cash inflow from customers, they need to be able to make timely payments. One of the criteria for prompt invoice payments that don’t require additional human intervention is accuracy. When vital data needed for your clients to understand the invoice and pay their bills is missing, the invoice becomes invalid.
There’s also a good chance your payment will be sidelined or cast aside until they are able to figure out the issue, which is a tedious process. You need to use clear and understandable invoice language. For example, instead of stating the order type, consider writing everything related to that order, like color, number, size, and model number. Include the total amount and do not abbreviate any term in the document.
Don’t forget to explain every term included in the document, especially when you want them to make payments and any previous, pending payments they have to make. It would help your clients manage their payment schedules and know the amount to pay without hassles. Include the incentives and discounts their order qualified for, penalties associated with late payments and the payment modes your business accepts. When using the paper invoicing system, review the invoices and contract manually to make sure the documents contain relevant and understandable information.
The best way to solve these issues at once is to back up and update your data across all channels and records. You can do this with an e-invoicing system or accounting planning software. When you use these systems, they automatically flag these issues before you send out the invoices.
One way to know a valid invoice is by including the actual company or sender details in your modern invoice template. If you send out invoices without including this crucial information, your invoices are as good as a mere letter.
All too often are errors with company information, such as name, address, job title, and serial number. It renders the invoice void when your customer receives it, causes payment delays, and leads to wastages since a new invoice has to be re-issued, printed and sent.
Ensure the following company contact information is included in the invoices to avoid problems and confusing information.
- Legal company name
- Name and job title of correspondence
- Email information
- Phone, mail, and registration number
- Bank details and number
- Office location and address
- Tax numbers required by local law
Avoid misspellings of your company name or including the wrong contact information to ensure your client doesn’t reject or dispute the invoice.
Undercharging or overbilling customers can be detrimental to your business. It reduces the cash flow of your business, causes data wastage, and leads to inconsistencies in your account.
You should check and re-check the price quote included in the client’s invoice to ensure it’s the actual price and the amount in the agreement between you and the customer. Another thing to check is if it matches the amount at which you render that service or sell the product.
With the issue of a false invoice, you’ll need to either completely remove the invoice and send a note to that effect.
After completing these steps, you can send a correct invoice to the client with a different invoice number. Don’t forget to retain the erroneous invoice for account clarification and reference.
Mistakes happen during the invoicing process that often goes unnoticed. For instance, you may forget to include the order serial number in the invoice or fail to itemize the products and services you offer to each client. It is also easy to forget when a customer makes specific invoicing requests, such as printing out the purchase order using precise details. You can also overlook slight over or undercharges during the invoicing process. Sometimes, something as minor as putting the decimal point in the wrong place is enough to render an invoice invalid.
These issues can be eliminated when you use an invoicing system to automate the entire process. The system does all this for you and corrects amount errors. It notifies you when the form fields’ information is inconsistent, incorrect or left vacant.
Manually inputting the invoice information shouldn’t deter you from sending accurate invoices. Before sending the document, you need to check and re-check the data, amount, and form fields. The checks help to eliminate or reduce the number of void invoices, the number of invoice corrections you have to make, and payment delays.
Your clients will get recurring invoices when you include inaccurate order amounts, incorrect payment due dates, and other errors. When your clients continuously receive these recurring bills, they will get frustrated, lose trust in your brand and delay payments. Your company will bear the full brunt of the mistakes through reduced cash flow.
It also costs the customers their precious time when they have to wait for invoice corrections from your accounts department. Even the errors you consider insignificant can be all the customer needs to sever ties with your business.
To help prevent this mistake, evaluate your invoicing process to determine the exact causes. You can double-check invoices before sending them if you’re using a paper invoicing system.
For electronic systems, check if the software is accessing order and pricing information from an old and un-updated database. The fix for this is to refresh the database to fetch new details.
As a business owner, you must ensure your invoices are accurate to avoid validity issues with your clients.