6 reasons why your invoices aren’t getting paid on time
Do you find that your invoices are consistently paid late? Are you needing to make invoice amendments for your customers? Spending days chasing your accounts receivables? We get it. Invoicing is an art, and it’s all about perfecting those invoices, so you’re not left chasing your tail.
Our team of experts have found that it’s often unclear invoices that tend to be the root cause. So, we’ve all put our thinking hats on and identified six common mistakes that can lead to late payments and what business owners can be doing to get on top of their invoicing.
Sending invoices late
Yes, it might seem simple, but if a customer doesn’t receive an invoice, it can’t get paid. Invoices backdated a month ago will immediately raise red flags for customers, causing confusion around goods and services ordered. Keep a record and send those invoices in a timely manner.
Providing unclear or incomplete information
Your invoice should state clearly what the billing is for – what goods or services were or are expected to be delivered and when. It’s best to provide as much practical detail as possible, so your customers know exactly what they’re paying for. It’s not ideal if your customer must pick up the phone, send an email or reach out to clarify what’s stated on their invoices. And let’s be honest, with today’s technology, it’s best to invest in an online invoicing system like Xero, Invoice2go or QuickBooks to keep your invoices readable, professional and trackable
Directing invoices to the wrong address or contact
Sending invoices to the wrong address or contact is one of the top reasons we have found invoices are paid late. Make sure you are aware of your client’s payment needs or processes. Do you send the invoice directly to Accounts Payable or should it go to the person who made the purchase for approval before it is forwarded on for processing? Get to know your customers.
Not being aware of customer procedures
More times than not, an organisation will have a certain list of requirements that need to be met for invoices to be processed properly. For example, some departments will not arrange payment if a purchase order is not attached or displayed on the invoice. Ensure that you’re across these requirements.
Writing up an invoice with unclear expectations
If you don’t provide any payment terms, how can you expect your invoices to be processed on time? Always ensure your invoices are simple, clear, and easy to read. It’s not ideal for any customer to be searching, guessing, or calculating due dates. Invoices that state 30-day terms without a physical due date present are likely to either be forgotten.
Not providing bank account details or reference information
Not proving bank account or payment details on an invoice will most likely delay processing. Trust us, a customer isn’t going to proactively chase your bank details. Following this, ensure your bank details are clear. It’s never a good idea to have all your information on one line. It makes it hard to read and could lead to unnecessary mistakes being made. Separate your bank account information, group two to four numbers at a time and provide a reference that you’d like your customer to use to make it easier for everyone to reconcile.
So what does a good invoice look like?
We’ve put together an example of a good invoice to show you exactly what is required. This example is for a Lawn Maintenance company who have provided services to a rental property on behalf of LG Hooker.
Referring to number one, you can clearly see who is being charged.
Two, three and four identify the invoice date, invoice number and your company’s address.
Five clearly states the invoice’s reference number.
Six outlines where and when the services were provided.
Seven lists all the services completed, along with an itemised cost per service.
Eight and nine clearly outlines exactly how much has been charged and when the invoice needs to be processed. As you can see, these points have been bolded to make it easier.
Finally, 10 has outlined bank details in a clear and concise manner. A reference number and online payment options have also been given to help speed the payment and reconciliation process up.
Require assistance with invoicing templates and procedures?
With the help of Xero accounting software, The BAS Agents is here to help automate, perfect, and reduce the processing time of your invoicing system. If you’re struggling with invoicing and are ready to make your life easier, get in touch. We can schedule a free consultation to discuss how The BAS Agents can help your business.
