4 Invoicing Mistakes That Your Business Can’t Afford to Ignore

The top four invoicing mistakes include failing to use a professional layout for the invoice, which can lead to the second and third mistakes; delayed invoicing and failure to itemize. The final mistake that must be avoided is a lack of follow-through in collecting payments once an invoice has been sent.

invoicing mistakes
Top 4 Invoicing Mistakes to Avoid – Royalty-free images by Pexels

1. Unprofessional Layout

One of the biggest mistakes a business owner can make is sending out an unprofessional invoice. This not only harms the reputation of the company but it may also contribute to some of the other mistakes we will be looking at. Poor formatting can make it difficult for the accounts department to discern exactly what they are paying for. This is a necessary step on their part in order to rectify their books and ensure all accounts have been paid.

Smaller businesses and entrepreneurs often think they don’t have the time or resources to devote to preparing a professional looking invoice. This is a mistake. Even those who are completely new to invoicing can utilize an invoice guide to create professional layouts that ensure no detail is overlooked.

2. Delayed Invoicing

The next mistake to avoid at all costs is failing to send the invoice to the client. This often happens because people become overwhelmed with the process of filling out an invoice and feel they need to focus on finishing upcoming projects rather than laboring over the minutia of paperwork. Even if they do make the time to finish creating an invoice some will delay sending it in anticipation of adding more work to the total before requesting payment.

Both of these inevitably lead to invoices that are overlooked and not paid. It is important to implement a system that makes gathering the data intuitive and as easy as possible. If the client has ongoing work, schedule a specific day to send invoices each week or at the same time each month to ensure invoicing is never pushed to the side and forgotten.

Invoicing in a timely fashion also makes it easier for the bookkeeping departments to make payments. When vendors delay invoicing by weeks or months it makes it more difficult for the accounting department to keep their records current and waiting too long may cause payment to be delayed further as the accounting department attempts to verify the receipt of goods or services.

3. Lack of Itemization

The importance of itemization cannot be overstated. Writers need to list each article they have written before invoicing clients. Doctors list each procedure, treatment, or service performed before sending invoices to insurance companies. Plumbers and mechanics list the cost of the labor, parts, and equipment supplied on their invoices.

For services that are charged based on an hourly rate, the hours worked on the project should be listed. This applies to miles driven and even invoices that are charging a flat fee should list what that fee covered. Failing to provide an itemized list explaining the charges in detail can lead to a dispute between the buyer and the seller. It can also delay payment as the details are worked out.

4. Failing to Follow Up

There are two components to a successful follow up routine that must be implemented. First, it is imperative that all invoices are backed up and a list maintained of paid and outstanding invoices. This is a basic bookkeeping principle that is imperative if one doesn’t wish to lose money. If a customer says they did not receive an invoice it is best to have a saved copy to send them and keeping a list of what hasn’t been paid will allow the second step to be implemented.

Set up a routine to follow up with clients if invoices aren’t paid within the agreed upon time. A friendly reminder is often all it takes to redirect the attention of an overworked client who has simply forgotten to forward a payment.

It’s important to create solid business systems to facilitate growth and proper invoicing techniques are part of this. A proper invoicing system will also pay off at tax time when it is necessary to explain to the government how much money was made.