One of the key things when people get into the business, either as a freelancer or an entrepreneur, is taking care of the finances. It could be an overwhelming thing for some, and rightly so.
Usually, small and medium enterprises tend to do most of their business activities by themselves. While this enables them to control their business better, it also implies that there’s abundant of information which they’ll require for catching up on. It includes working on a business’s most crucial document related to cash flow—invoices.
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Knowing how to invoice your customers properly is a key skill for entrepreneurs and business owners. Not just it ensures that you are paid for the goods or products, it also helps in preventing costly mistakes with respect to taxes and also keeps your books of account in good order. For several businesses, it also means creating a GST invoice. Whenever any registered taxable person supplies goods or services to a customer, a GST invoice is required to be issued. Such type of invoice comprises of GST amount for goods or services which your business has supplied to the customers.
The top points to issue an invoice are:
Understanding an Invoice
An important thing to understand about the invoices is to actually be clear about what invoices are. An invoice is a document sent by the seller to a buyer subsequent to the delivery of goods or services. An invoice identifies a seller, buyer, and goods or services sold, along with the quantities and prices. It’s legally-binding after both the sides agree to the conditions and is non-negotiable.
Accurate billing is very important for small business owners and independent contractors. One cannot afford to lose customers over something which should have been done right at the very first instance. Business owners providing prompt and detailed invoices straight to their customers, stay ahead in terms of credibility stakes.
Here are some of the top points on building trust with your invoice:
- Being transparent – Your clients would wish to know where the money they’re paying is going, so do not hide or be general with the line items on the invoices. Be very specific. For instance, instead of listing material as an expense, list all the materials on its own line, like nails, paint, plywood, etc.
- Easy to understand: Keeping your invoices simple allows your customers to exactly understand what they are billed for. List goods or services in the way which a customer could easily understand.
- Be polite: Though it might seem slight, using phrases like “thank you for your business” and “please pay by” on your invoices would increase you’re the chances of getting paid on time.
- Using digital format – Invoices with digital format are one of the ways of ensuring that your invoices look professional, and helps you in following the best practices. Simple mobile apps would help you in creating and sending professional invoices. These apps could even store the receipts so that you keep your expenses organized in real-time for easy presentation to the clients.
- Include all necessary information in your invoice: You should clearly display the word “Invoice” on your invoice. Additionally, you should have a UIN (Unique identification number), name of your company, address, contact information and address of the customer. Also, the supply date, the invoice date, the amount being charged, GST amount wherever applicable and total amount owed.
- Define the rules: A lot of people do not mention due date on their invoices. “Please pay promptly” is an agreeable sentiment, however most of the time it fails. You might run into trouble when your understanding of ‘promptly’ is different from that of your clients. It is strongly recommend setting a due date and displaying it clearly on the invoice. It leaves no doubts in the mind of the client about what’s required of them.
Smart invoicing is not a rocket science, and it is something that all business owners whether large or small, could easily incorporate in their business processes. It could be difficult to get your customers to pay timely for your goods and services. Consequently, you could fall behind in your business payments. While one can’t control each and everything about their clients, one could change the way one invoice. By employing the above-mentioned effective invoicing strategies, it is possible to increase the chances of getting paid and also on time.