8 common errors in invoices

Errors made in invoices can often cause inconveniences such as strained relationships with customers, damage to the company’s brand image, delay in receiving payment, and various other problems.

• Lack of communication

The majority of the invoice problems circle the fact that there is a definite failure in communication. An invoice must convey more than just a reminder for payments due. An invoice is a representation of what your business is all about.

A good invoice leaves no room for doubt in the minds of the recipient. It must communicate clearly and provide information regarding what services were availed or what goods were supplied to the recipient.

• Delay in sending invoices

Traditional businesses that do not yet use invoicing software have a higher tendency to fail in sending out invoices promptly. Delay in sending out the invoices may also inconvenience the recipient as the money set aside to make the invoice payment may be utilised for other purposes. The responsibility for sending out the invoices promptly lies in the hands of the business.

• Lack of professionalism and courtesy

Some businesses fail to understand that any document that bears the business’s name gives the customer an impression of what the business is all about, what values it strives to uphold, and the level of professionalism prevalent at the organisation.

Messy font, mistakes in calculations, lack of common courtesy in the invoices may leave a negative impression in the minds of the customers. Moreover, it could cause damage to the brand name of the business. Invoices must have a sleek design; they must have the ability to leave an impression in the minds of the customers.

• Overstatement or understatement of the invoice value

Adding on fees that were not previously agreed upon may inflate the value of the invoice and leave the customer confused. Suppose you do not take the time out to double-check the figures in the invoices. In that case, there is a high chance of the invoice containing overstatement or understatement errors, especially for businesses that use the manual billing system.

Where the invoice does not reflect the right amount, it may be sent back for corrections, or a new invoice may have to be issued. All this causes inconveniences to both the customer as well as the business. 

• Incorrect application of taxes

Miscalculations in the taxes applied will accordingly affect the total value of the invoice. Moreover, if not rectified, the miscalculations or errors made here will lead to further problems while the GST returns are being filed since reconciliation may not be possible.

For instance, taxes are levied on the invoice where a seller is taxable under the GST composition scheme. Another common error is the application of CGST and SGST on interstate sales, whereas the GST law requires that IGST be charged.

• Absence of invoice due date

Vague terms for payment such as “as soon as possible” and “immediately” tend to confuse the business since no specific date is mentioned. A term such as “as soon as possible” is open to interpretation, giving scope for miscommunication. Specifying the exact payment date will help the customers make arrangements for the payment and help them efficiently track their payments. 

• Presence of incorrect payment information

Sensitive information such as the bank account details and contact number must be provided with due care not to contain any errors. If there are errors in these details, it could lead to the payment being made to the wrong account, causing major problems with regard to the fulfilment of the invoice and the inevitable delay in the receipt of payment.

• Reference to incorrect purchase order number

In an invoice, the purchase order number constitutes one of the important details for reference and verification. It can either be alphanumeric or just numbers. When the business carries on invoicing manually, there is a high possibility of errors such as incomplete purchase order details, incorrect purchase order numbers, etc., being made.