Invoice Management

7 Common Invoicing Mistakes and How to Avoid Them

Billing errors can negatively affect your company’s cash flow, hindering your business growth. Learn how to avoid invoice mistakes in this article.

Running your business entails creating invoices to collect payments for your products or services. Invoicing is thus vital in keeping your cash flow under control. As such, you should process invoices properly. Keep in mind that errors can negatively impact your revenue.

Let us discuss the common invoice mistakes small businesses make and how you can steer clear of them.

1. Failure to itemise your charges

Some companies fail to itemise the charges on the invoice. This practice can lead to confusion, mainly if the company sells different products or services to the same customer. It is also possible to overcharge a client, resulting in loss of trust in you as their vendor or supplier. 

Make it a habit to indicate every transaction in detail to avoid this mistake. This transparency will assure your client that you only charge them for the products or services you rendered to them—nothing more, nothing less. 

2. Erroneous or missing data

Placing incorrect information or providing inaccurate data may be one of the biggest invoicing mistakes business owners make. For instance, business owners would often write payment terms such as “7 days upon receipt instead of indicating the invoice due date.” As a result, the customer is left guessing when the invoice is due.

Double-check all the information on an invoice before sending it. Indicate the payment methods your clients can use, the payment terms, any incentives or discounts owed to the client, and any applicable penalties for unpaid invoices. Don’t forget to indicate basic details such as the company name, invoice date, and invoice number. 

Remember that billing errors can negatively affect your brand image, pushing clients to look for alternative companies. 

3. Billing your clients inconsistently

It’s common for some businesses to send invoices on a different date each month, which may cause issues for both the biller and the customer. In these cases, the client may not include the payment in their billing cycle since they have no idea when to expect their invoice. Payment delays may occur as a result of this.

Set your invoicing period to a regular date each month to avoid this. It can be the first or last day of the month. A midpoint date can offer just as much consistency. Doing so gives your clients more time to prepare the payments.

Moreover, consider using invoice management software for more efficient monitoring. The tool automatically sends payment reminders, allowing you to keep track of invoices and payments.

4. Not being clear about payment terms

Some companies fail to lay down the payment terms on the invoice, often causing major issues such as sending incorrect amounts and delayed payments. You can avoid this error by clearly indicating the payment terms on the invoice. Doing so will help minimise any confusion and manage expectations for all parties involved. 

Your invoice should include expected due dates, payment options, refunds, and late payment terms.

5. Including hidden fees on your invoice

Adding hidden or unclear fees on the invoice can make a client feel like you are trying to defraud them. They will not hesitate to switch to your competitor when they sense any sign of deceit. 

Avoid making this mistake by communicating all charges to your client, no matter how insignificant you may think the amount is. Moreover, it’s important to be transparent about taxes or VAT, kill fees, or add-on charges. 

6. Using a manual system

Many small business owners still use a manual system or excel for invoicing. However, this is not only prone to error, but it is also time-consuming, not to mention costly.

Consider using an invoicing system to avoid mistakes attributed to human error. Doing so can significantly improve organisational efficiency and productivity. 

There are several invoicing software available to help streamline the payment process. You can create invoice templates and automate invoice reconciliation for better bookkeeping with the right software.

7. Not chasing up on late payments

Some companies fail to follow up on late payments, often due to the high volume of invoices they need to process. Doing so usually limits the company’s cash flow, hindering business growth.

After your initial send-out, a client may not pay right away and may subsequently forget to do so. You can solve this problem by sending payment reminders when the deadline is past due.

You may also remind clients of interests or late fees for unpaid invoices to encourage them to pay on time. Offering discounts or other rewards for early payments can help you get paid faster.


Make Your Invoicing Process Foolproof

Invoicing errors can cause confusion and mistrust between you and your customers. Worse, you may lose clients. These mistakes can negatively affect your revenue while damaging your reputation.

Being familiar with the gaps in your workflow and how you can resolve them can help prevent invoicing problems. Consider using Spenmo to streamline your invoicing process. This end-to-end payables software brings internal spend management, automated bill payments, approval workflows, and accounting reconciliation into an integrated view. 

Spenmo reduces invoicing-related work by up to 50 hours. Companies that use Spenmo save over $10,000 every month! Book a demo today to learn more about Spenmo’s business-friendly features!


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