Quick guide to online invoicing for small businesses
By Mark Thomasson
The traditional way of invoicing has many limitations. It takes a lot of time which you could use for business development and strategic thinking. For most people, operational details are boring and time-consuming, especially for small business owners. You must manually generate the invoice, send it by mail to the client, and wait for their check.
There is a way to simplify the entire invoicing process and improve your business. Online invoicing made a major breakthrough in achieving cash flow. Also, it´s automated, so the online invoicing software does everything for you. With it, you don’t have to think about billing due dates. It keeps track of payment status and an amount of every client´s debt.
These benefits are just the tip of the iceberg. There are many of them. When you try an online invoice system such as ours, you’ll be sorry why you didn’t know about it earlier.
If you are a small business and you want to show your full professionalism to your clients, you must master invoicing process.
You can create and manage your invoices using this simple guide to online invoicing for small businesses.
First, it’s important to format your invoices correctly
Although this process is online and you have many beautiful and functional templates to choose, there is some formatting that you must standardize.
If you choose a corporate invoice template, legal invoice template, catering invoice template or any other, all your invoices must have the same format. Fortunately, that is the rule that most templates follow.
So it doesn’t matter which industry you’re in, there are always invoice themes to reflect that and integrate with your branding strategy.
What should the invoice header look like?
On the left top of every invoice, there needs to be the name of your company and logo, or your full name if you are a freelancer.
Under that, you should list your contact information: address, city, state, ZIP code, country, your phone and email.
The client’s contact information
Beneath header, on the right side of the invoice, add your client’s information such as: company, client´s name, address, phone, and email.
If you do freelancing and you don’t know the address, then it is all right to add your client’s name and email address only.
Invoice number and date
On the opposite side of the client’s information, you should add: invoice number, preparation date, payment due date and preferred payment option or currency.
Set a due date of 30, 45 or 60 days from the preparation date by client’s pay cycle.
Listed items
In the central part of the invoice (in a tabular display) list all the products or services that you delivered to your client.
Include these six columns:
- Item: This is the short description of your delivered products or services.
- Quantity (or Hours): This includes quantity of sold products or how many hours you worked on projects.
- Price (Rate): In this column, write the price you are charging for products or your hourly rate.
- Discount: If you give a discount to the client it should be emphasized here.
- Tax: Include taxes here.
- Line total (Amount): This is the total charged amount that is for every product or service.
Finally, calculate the Total, which is the Subtotal (sum of Line total) plus tax, delivery fee, or any other extra fee. The total amount should be in bold.
If you’re using an online invoicing service, this will all be done automatically for you.
Terms and notes
Below the total amount of every invoice, you should write any additional information, such as terms and notes. Write down your return policy or how many days the client has to pay before charging a late fee, if you have one. Also, you can motivate them for a discount if they pay the full amount on time.
Be polite and use the words “please” and “thank you” in your invoice. You will increase the percentage of paid invoices before a due date.
Importance of invoice branding
Branding your invoice will add professionalism. It will increase the probability that you are more likely to get paid.
Add a logo and include your brand’s colors on your every invoice. This makes a great impression on your clients. If you’re a freelancer, you can always put your headshot photo, so your clients remember you. You’ll probably get more hires in the future due to this trick alone.
Divide your invoices into smaller amounts
If you need to charge a large sum to your client, break it into smaller amounts. You could require a deposit, another sum in a middle of a project, and the balance at its completion.
For me, flexibility has always proved to be a good solution. This keeps the cash flowing and also makes it easier for clients to pay me.
Why should you use online invoicing software?
With invoice software, such as Invoicebus*, create your invoices quickly and easyily with lots of interesting templates. Customize invoicing template for every client, send invoices electronically and set due dates, give discounts, use all the payment gateways you want, and more.
* Disclosure: I’m one of the guys behind Invoicebus.
The invoicing software will remind your clients of due dates. You will get the notification when your client opens, reads the invoice, comments or pays it. This saves you a lot of time, effort, and money.
Online invoicing software also allows you to manage, organize, and track your invoices from your desktop or smartphone. At any moment you can know which invoices have been paid, which have not, and the amounts which clients owe you are highlighted.
Take care of your invoicing
Invoicing software will notify you of everything that’s going on with your online invoices. If you’re a small business, it’ll take a couple of hours every week for you to schedule new invoices or review existing ones.
It’s important for your business to invest in online invoicing software. The benefits are huge. You will get quicker payments, improve your cash flow, and get more time for the things that matter.
And remember: Only with regular cash flow you can sustain and grow your business.
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Mark Thomasson is a biz-dev hero at Invoicebus – a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.