Retail and wholesale-based businesses need to realize as many efficiencies as possible to survive in the marketplace. Today, success is dependent upon modern tech stacks with cloud-based software that best suits inventory-centric operations.
The adoption of cloud-based software has helped product sellers succeed in an industry that has been disrupted by COVID-19 and global conflict. By taking full advantage of the move to the cloud, thriving businesses are enabling their remote workforces, automating the increasing demands of digital commerce, and protecting their intellectual property with the latest in web security.
Avoid paying interest on cash borrowed from business credit lines to bolster cash flow
Few aspects of business are more critical than timely and accurate accounts receivable. Meticulous invoicing keeps cash flowing into the business. Leaving such a crucial function to error-prone, manual processes is a mistake that small businesses can no longer afford. And the process doesn’t end at sending invoices to customers. Accurate, real time data supports follow-up on receivables – also key to maintaining cash flow.
When it comes to invoicing, errors and delays lead to lost revenue so it is vital to understand what mistakes businesses often make and how to avoid them. We preface the following tips by generally advising that by adopting cloud-based accounting software from a respected vendor that is custom integrated with an inventory control platform ensures all financial data is managed on an accurate and timely basis. Here’s a comprehensive list of common invoicing mistakes businesses make and the solutions to ensure you can prevent repeating them.
1. Sporadic invoicing
When businesses send invoices to customers inconsistently, it’s easy to fall behind. Invoicing on different dates each month can also lead to receivable delays. This mistake is likely to occur because some businesses only invoice on specific days of the week.
This can be an issue for customers as well. Customers have difficulty planning their cash flow because they have no idea when to expect an invoice. Random invoicing results in delayed payments causing receivables to age beyond 30 days. To rectify this, select specific dates every month on the calendar to regularly send invoices. The best solution is to automate the process with invoicing software. Customers will be well aware and have enough time to arrange the payment.
2. Timely collections
Simply sending invoices doesn’t complete the job. It is essential to follow up with customers who haven’t made payments within agreed credit terms. Organization is key to success here and failing at collections hinders growth and long-term viability.
Once an invoice is sent, it is recommended to set a reminder to follow up on debts. When the time comes, a persuasive email that urges customers to take action immediately can be effective. Best practices encourage the use of accounting software that helps manage receivables and sends reminders of past due invoices.
3. Unclear terms of payment
Always clearly specify Terms and Conditions regarding payment terms. This should include details about late fees, pricing, and other details about products and services. State all payment policies on invoices so that customers aren’t confused and can make payments on time.
Be as specific as possible. For example, a customer may wonder if “net 15 days” excludes weekend days or not. Instead, specifying “net 15 business days” will offer clarity.
4. Lack of company branding
Company branding is an invoice element that can have an impact. Undoubtedly, branding is crucial for every facet of business, and invoicing is no exception. Including branding on invoices means customers can easily identify who the invoice is from.
Moreover, using a company logo and clear branding on invoices ensures that customers can easily spot invoices from your business. Each branding opportunity can help improve awareness in the marketplace. Leveraging the benefits of invoicing software like QuickBooks Online offers custom invoice templates and the ability to add branding elements.
5. Inconsistent back-ups
Invoice data is an important part of an overall back-up plan. Depending upon location, a business may be legally obliged to archive invoice data for a specified period of years. Furthermore, an ability to provide customers with archival invoice data upon request demonstrates that their account is being managed properly.
Every invoice sent should be backed up either as a physical copy or a digital one. Keeping a paper copy is not highly recommended as it is prone to be misplaced or damaged. Backing data up using a cloud storage service or adopting cloud-based accounting software are both compliant solutions.
Accurate and timely invoicing is critical for long-term success and growth.
In this article, we have covered some of the most common invoicing mistakes and how they can hamper receipt of payments. If a business is reaching the point where it can no longer afford to rely solely on error-prone, manual data entry to manage invoicing, or relying upon legacy invoicing software, we suggest upgrading tech stacks to modern, cloud-based solutions.
Intuit and DEAR Systems have recently partnered to offer an Advanced Plan bundle that includes a subscription to both QuickBooks Online and DEAR Systems inventory and order management beginning at $375 per month. This offers the perfect opportunity for growing product sellers to easily enjoy the very latest cloud-based solutions to manage cash flow, inventory, and order fulfillment.