Whether your business is generating invoices to send to clients or receiving invoices from independent contractors, you need to have a system in place for managing these records of payment. A business lives and dies by its cash flow; if you get confused about who has sent money where and when, you could get your business into a difficult financial situation – which could result in complete and utter failure.
Fortunately, you don’t have to be resigned to business failure. By knowing of the common pitfalls surrounding invoicing and payment, you can stay organized and on track toward success.
Tardiness
You need to send invoices on time, and you need to pay invoices on time. Tardiness is detrimental to your business for dozens of reasons, from extra fines to poor relationships with suppliers and services providers. Neglecting to pay attention to invoice deadlines could also mess with your cash flow, making your incoming and outflowing cash more difficult to predict. You should strive to put your invoicing on a strict schedule, so you and everyone in your business network knows when money will be moved around.
Duplication
It is tempting to pay every invoice that comes your way as a means of keeping your payments prompt and your desk clean, but if you aren’t careful, this method of invoice management could cause you to lose more money than you might expect. Sometimes, a vendor will send a duplicate invoice – perhaps because you are late paying the first copy or perhaps because they are hoping to get paid twice. If comparing every invoice you receive to past payments seems like a chore, you can outsource this security measure to AI tools.
Surprises
You should never be surprised by a charge on an invoice. If you see a strange charge that you do not recognize, you resist the urge; you should make inquiries with your vendor. Sometimes, projects run long and require extra effort, or prices of materials increase due to various supply chain issues. As long as your vendor can provide a satisfactory reason for the charge, you can pay it. Otherwise, you should fall back on the payment stipulations of your contract.
Disorganization
A single surprise charge is one thing; consistently being confused about the purpose of an invoice is quite another. All invoices should have clearly itemized products and services with corresponding charges, which allow you to track your expenses and verify that the payments you are making are accurate. You can request vendors to itemize their charges on their invoices if they are not in the habit of doing so, but you should avoid making any payments before you truly understand what the charges are for.
Miscalculations
Sometimes, a confusing invoice is not the result of disorganization but rather miscalculation. Billing errors happen; sometimes, a finger slips on a calculator and the wrong number gets sent to clients. You should get in the habit of tabulating the charges on your invoice rather than assuming that the final total is accurate. If you notice a miscalculation, you should request a new invoice from your client, so your records will align.
Sole Copies
Your business should never have just one copy of anything, especially invoices. Disasters happen, and if you make sole copies, you could lose the one record you have of payments your business desperately needs. It is best to store records of your invoices and payments on the cloud, where they are much less likely to fall victim to calamities like spilled coffee or fire.
Recipients
The most important piece of information on an invoice isn’t the total price or the due date but the recipient’s name. Vendors can mistakenly send the wrong invoices to the wrong clients, and if you do not pay attention to the intended recipient of an invoice, your business might pay someone else’s bill. Similarly, you need to be certain that any invoices you send out are properly addressed. Issues with names on invoices can lead to trouble come tax time, and to prevent billing delays, you should double-check that the right name appears on every invoice you create and pay.
Too many invoice errors can cause you business to falter, and you do not want the story of your business failure to focus on easy-to-fix mistakes. There are so many solutions that make invoice management fast and error-free, and you should look into them if you struggle to keep your invoicing process in line.