Steer Clear from These 10 Invoicing Mistakes

July 14, 2022
Phil Cohen

Invoicing your clients is a crucial step to getting paid for your services. As the official record of a business transaction, your success will depend on your ability to create, send out, and collect on your invoices. Unfortunately, invoicing mistakes are common due to a number of factors. One or two mistakes are to be expected; a continuing pattern of errors can lead to disaster. Below are the ten biggest invoicing mistakes that small business owners should avoid.

Sending Invoices

1. Not sending invoices

How can you expect to be paid if you don’t send an invoice at all? Even if you have a verbal (or written) contract with a client, it is your responsibility to secure payment for your work. An invoice is a reminder to the client that they owe you money, as well as a written record of what they owe you money for. Plus, invoicing makes your record-keeping easier when the payments come in!

2. Waiting to invoice

The best time to send an invoice is when you complete a project or deliver a product. If you wait longer than a few days, you may forget to send the invoice entirely. Also, depending on your customers’ payment cycles a late invoice may cause your payment to be delayed.

3. Sending invoices to the wrong place

Nothing slows down payment quite like sending the invoice to someone besides the customer. If you are billing a large company, head off any confusion about who should receive invoices by contacting the company and getting a proper name and contact information. Direct all of your invoices and correspondence about payment to that individual or department.

The darker side of this situation is sending an invoice to the wrong company entirely. This will almost certainly reveal confidential information to unauthorized individuals, which is not only irresponsible but also a potential legal risk depending on your industry.

Charges & Terms

4. Not including terms on your invoice

Use your invoicing to remind customers about policies regarding payments and refunds, delivery windows, and other pertinent information. This also allows you a simple way to inform customers of policy changes. If nothing else, include a due date (specific is better) and your preferred method of payment. 

5. Failing to itemize

Whether you provide staff at an hourly rate, charge for deliveries per mile, or have a flat fee per project, every invoice should include an explanation of each charge. The level of itemization you choose may vary based on your business and your preferences, but your customers should be able to easily understand what they are paying for.

6. Including unexplained fees

There is nothing worse for a client than to open an invoice and see undiscussed fees listed. At best it will prompt confusion; at worst, distrust. Fully explain all charges to your clients before they accept service, including fees for additional services or changes. Itemizing, as mentioned above, will help you keep these charges clear.

Invoice Layout

7. Poor formatting or editing

Spelling errors, incorrect dollar amounts, and lazy formatting not only make you look sloppy and unprofessional but also can prevent you from receiving correct payment on time. Double and triple check your invoices to catch these mistakes before you send out invoices.

8. Leaving off your logo

An invoice is a perfect opportunity to remarket your company to your clients! Include your contact information and a clear logo so they keep your company in mind for the next time they need similar work done. (It also helps them refer you to new business…) 

Invoice Follow-up

9. Not backing up invoices

If you use an automated invoicing system, you should already have saved copies of your invoices. If not, you are courting trouble if you don’t have another system in place for backing up your invoices. Saved invoices allow you to address any customer disputes, re-issue invoices to late payers, and maintain accurate records for your own bookkeeping.

10. Failing to follow up with late payers

Finally, when you invoice your customers you have to be prepared to follow up if they don’t pay in time. Letting customers go for weeks or months without addressing unpaid invoices decreases your chances of ever receiving payment and costs you money in the long run. An effective collections strategy will bring your invoicing full-circle.

When you need help with your working capital and working your business full-circle, invoice factoring may be the answer. Factor Finders can connect you with the perfect small business factoring company for your cash flow needs and provide the back office support to help your company thrive. Request a free factoring quote and get started today!

About the Author

Phil is the owner of PRN Funding and sister company Factor Finders. He has been an authority in the factoring industry for over 20 years, serving on the board of directors for several factoring associations.

Learn more about Phil Cohen