On the outside, an invoice seems pretty simple- it’s a document that tells your customer that they owe you money, the amount they owe, and when it is due, right? Yes, but those are only a handful of the many things a well-crafted invoice should contain to ensure timely payment. Many of the companies who struggle with collections are not having a hard time because of their customers, it’s usually the company’s fault and invoices are among the top reasons for delayed payment.
Why? Because they are not sent out in a timely manner and/or the invoice has incomplete or missing information necessary for payment. Generally, all invoices should include the following:
Your company’s information
- Your Business Name and logo
- Your Business Mailing Address
- Your phone number and extension
- Your email address
- Your fax number
Client Company’s information
- The Client company’s name
- The Client’s Business/Mailing Address
- The name of the person handling the account at the client company as well as their contact information
- A small company can likely figure out what’s going on, but in big companies, invoices get misplaced so you will want to make sure you are specific about the recipient.
Necessary Information for payment:
- Project Name
- Itemized list of services/products
- Total Amount Due
- Note any discounts given
- Consequences of late payment
- Ex: “A Late Fee of x% may be assessed on past due balances”
- The exact language can vary and you might want to have your legal advisor review or provide the exact wording. The fee percentage (interest rate) is regulated in some states so be sure you know what the limits are.
- If the charge is project-based or hourly
- Include a Remit to address.
- If appropriate, also include instructions to “make check payable to” the entity name you prefer.
- Invoice Number
- PO Number/Job number
- Payment Terms
- Due Date
- A Phrase thanking them for their business
- Supporting documentation such as a signed receiving document (proof of delivery) or approved timesheets. This will be different for every customer so be sure to ask about their requirements before starting work.
Even if you do draft the perfect invoice there are plenty of other factors may result in late payment. Many companies have too few employees dedicated to A/R and those resources they do have don’t have the time to following up with customers to confirm invoice receipt, send reminders about invoices approaching their due date, and handle the many other issues a collector faces each and every day.
Accounts receivable management automation puts your accounts receivable and credit collections on auto-pilot with built-in workflow to help you identify who to call, when, and why, so collectors can quickly and easily communicate effectively with customers, documenting what has been done, and measure the results.