10 Common Invoicing Mistakes You Can Easily Avoid
Sending invoices to your clients is an important part of owning a small business. But as you’re sending out all those invoices, mistakes happen. Some you may not even realize you’re making—all of which can lead to delayed or missed payments and client miscommunications.
Here are ten very common invoicing mistakes and billing errors you can easily avoid to help you cash flow and grow your business.
Mistake #1: Not Promptly Sending Your Invoice
It’s important to send invoices on time.
For example, a freelance writer may submit an invoice immediately after they’ve submitted their first draft to the client. But in some cases, you might have agreed upon invoicing at the end of the month or based on a specific billing cycle.
In either case, don’t wait for your customers to ask for the invoice. They’re busy, and chances are they’ll forget to remind you, and unpaid invoices may pile up. The responsibility is yours.
Plus, the sooner you send that invoice, the faster the customer pays.
Mistake #2: Failing to Specify a Due Date for Payment
Vague invoice payment terms can be confusing for clients and lead to late payments.
For example:
- “Upon receipt,” tells the client that they need to pay the invoice as soon as possible. But, “as soon as possible” is open to interpretation.
- “Net 30” may be confusing for those who aren’t business savvy.
- “Within X number of days of article completion” can also be understood differently among clients.
To avoid any confusion, specify the exact payment day. For instance, if you submit your invoice on the 1st of August and want payment within a week, set the payment date for the 8th of August. Most invoicing software, like FreshBooks, make it easy to specify and customize due dates.
Setting a date for payment will also help you predict cash flow, as you’ll have a better sense of when you’re going to get paid.
Mistake #3: Sending The Invoice to the Wrong Person
Sometimes, the person or people you’re working with on a project isn’t the person who can help you get paid. This is particularly common in larger companies.
While most folks will help you out and forward the invoice to the right person, it can cause delays and missed invoices. Instead of letting an invoice sit in the inbox of the wrong contact, tie up those loose ends at the beginning of the relationship by asking who your key billing contact is. This will get you paid faster and save your clients from playing hot potato with your invoices.
Mistake #4: Not Itemizing Services
Some clients don’t need detailed and itemized service breakdowns, others do. For many customers, it’s a matter of procedure and helps when tracking, recording, and reporting expenses. It also creates transparency and builds trust between you and the client, so they understand exactly what they’re paying for.
For instance, if you’re writing a blog post for a client, you might include the title, word count, and even hours worked within the description of the invoice.
Making it a habit to provide itemized service breakdowns, regardless of who the client is, is a foolproof way to avoid receiving emails from clients asking for service breakdowns, reducing revisions and speeding up payment.
Mistake #5: Not Showing Courtesy In Your Invoice
Believe it or not, this is one of the biggest invoicing mistakes. Many business owners, fail to include courtesy phrases like “Thank you for your business” or “Please pay by [date].”
A simple thank you on your invoice can get you paid faster and result in positive cash flow. A FreshBooks study found that 45.12% of invoices that use “Thank You” in the payment terms get paid in fewer than seven days, with an additional 12.70% getting paid in fewer than 14 days.
According to FreshBooks research, 89.61% of invoices are paid when they include the term “Thank You,” while 88.07% of invoices are paid when they have the word “Please.” Being polite in your invoice payment terms is an easy way to help you get paid faster.
Click here to read the full article about invoice payment terms.
Mistake #6: Not Restating Terms
It’s important to specify terms and provide a detailed breakdown of services and costs to avoid scope creep with any project.
It’s also crucial to restate these terms and specify what services you did provide when you’re sending invoices. Why? So you can protect yourself from scope creep.
Clients can sometimes make more demands on your time by requesting extra revisions and changes after you’ve invoiced. Restating the terms protects you from any out-of-scope requests and reduces the risk of unclear terms.
Mistake #7: Not Following Up
You sent an invoice, three weeks have passed, and still, no payment. Should you follow up?
Some clients forget to pay because they’re busy. Some clients will wait until the exact due date to pay, and others wait until you badger them (yes, these clients exist). In either case, following up solves problems of late payment. More often than not, a client likely won’t be annoyed. You’ll just speed up payment and get a simple apology for the delay.
If you’re someone who dislikes following up and would rather take the personal element out of it, tools like FreshBooks let you automatically send customized late payment reminders, so you never feel awkward about following up. On top of automated reminders, you can also set and automate late fees in FreshBooks to further prevent late payments.
Mistake #8: A Difficult Payment Process
A client has received your invoice, but there’s one problem: They have no idea how to pay you. So they table the process for a later time, delaying payment or missing i altogether.
You need to let your clients know how to pay you, whether it’s via a bank transfer or through online payments platforms such as Stripe. Offering multiple payment options to your clients is an easy way to avoid common billing errors, late payments, and ensure you’re paid don’t time more often than not.
Even if you specify the payment method, ask yourself, “Have I made it easy for clients to pay me?” The easier it is for a client to pay you, the faster they’ll do it.
FreshBooks provides multiple payment options by accepting credit card payments, Apple Pay, bank transfers, Paypal, and Stripe. You can even set up automatic bill payments for recurring invoices to make it even easier to get paid.
Mistake #9: Including Surprise Fees
No one likes surprise costs, and your customers are no different. If you need to do extra work that extends beyond the agreement, speak to your client before doing that work and especially before invoicing for it.
Outside of common invoicing errors that make it tough for you to get paid, shocking your clients with additional costs and fees creates a bad experience for them, and can harm your client relationship.
Mistake #10: Sending an Invoice That Includes Errors
Of course, a common mistake in invoicing is…mistakes.
Have you sent an invoice, only to realize that the date is wrong, the invoice number is incorrect, there are incorrect balances, and you haven’t referenced the PO or included information that the client requested? It often means you’ll have to re-do the invoice and the client has to sift through multiple copies to find the right one.
The answer is simple. Take the time to proofread your invoices for spelling errors and all other errors before sending them. This can prevent constant back and forth emails that further delay payment.
Alternatively, upgrade to an online invoicing system. Invoicing software, like FreshBooks, automate a lot of the common errors with invoicing. For example, it will automatically add up any totals, update invoice numbers, and even convert estimates into invoices. Plus, you’ll be able to customize your invoices with your branding and preview invoices before sending them—so clients receive the right invoices every time.
FreshBooks Invoicing Helps Avoid Common Mistakes
By using invoicing software or an invoice template, you can instantly minimize the number of common errors that happen on invoices.
Aside from these features and benefits, and the others mentioned in the post, FreshBooks Invoicing helps you:
- Impress your clients with custom branded invoices
- Get paid for work upfront by requesting a deposit
- Manage overdue invoices by setting a late fee when invoices become overdue
- Save time by automating the invoice schedule and duplicating invoices when you need a similar invoice to the one sent in the past
- Reward loyal clients with the ability to set discounts
- Cater to your client’s needs with multi-currency billing and multi-language invoices
- Create subscriptions or use checkout links to avoid invoicing altogether
Ready to improve your invoicing process? Try FreshBooks free and see just how easy it is to avoid these common invoicing mistakes.