It’s the classic Catch-22: you need money to get paid, but you can’t get paid until you have invoices. Invoicing is an important part of growing your business. If it feels like everyone around you is churning out invoices without breaking a sweat, that’s because most people do invoice incorrectly—and that’s costing you money.
To help you invoice with confidence and ease, here are five invoicing myths that may be holding you back—along with the facts about why they’re just plain wrong:
Myth 1: Invoices should be submitted as soon as possible after a service is completed.
FACT: This myth could cost your business up to 50% of what you’re owed. The way that many accountants and small businesses get tripped up is by attaching a payment due date to their invoices. In some cases, this can be appropriate—if it’s a contract for a set period of time, the amount is known at the beginning, and you’ll be paid before the end of the term.
But this isn’t always the case. If you attach payment terms to an invoice, customers assume that they have 30 days (or whatever your terms are) to pay you. But you know better than anyone how long it takes to actually get paid—that’s why some businesses charge 15% interest if payment isn’t received within 10 days.
If your customers get used to waiting for invoices before they pay, you’re going to have a hard time getting paid faster than that! Instead, strategically plan when you send invoices based on when payment is due.
For example, if you can bill monthly and it takes two weeks for a customer to pay, send your invoice two weeks before the end of the month. This gives your customers some time to cough up their hard-earned money—and makes it easier for you to track expenses against revenue.
Myth 2: Customers are more likely to open invoices on paper than through email.
FACT: Paper invoices are obsolete—and so are the customers who are used to receiving them. By now, your customers have moved on from paper invoices to digital receipts of every sort. Paper invoices often get lost or misplaced, making it difficult for customers to pay you on time—or at all.
If you’re still sending paper invoices, you’re working against yourself. This type of thinking is the epitome of old-school business—and it’s holding your business back!
Invoicing software is now prevalent and is becoming the standard as we become more digitized. Most customers today prefer to receive receipts and invoices via email, rather than snail mail (which can delay receipt by days or even weeks).
Myth 3: It takes too much time to send invoices electronically.
FACT: Some people fear that sending invoices electronically will take too much time and energy—but you’ll save hours of administrative work by not filling out paper forms and making photocopies. Invoicing software for example, allows you to send an invoice in different formats your customers will appreciate receiving an invoice they can open on any device.
Inviting your customers to pay online is easy with today’s technology, and it doesn’t cost a cent. Most invoicing software provides both an HTML email version of your invoice and a downloadable version that can be viewed in Adobe Acrobat Reader or another PDF reader. Either way, once the customer has paid, an electronic funds transfer (EFT) credits your account immediately.
Myth 4: I have to charge my customers sales tax.
FACT: In many cases, you don’t have to worry about charging or collecting sales tax—that’s the customer’s responsibility. Contact your state department of revenue or a local tax consultant for more information.
Again, this is to help you invoice with confidence and ease. If you have any questions about your invoicing process, leave a comment below. I’ll be happy to answer as soon as possible!
Myth 5: Making an invoice varies depending on the type of business.
FACT: Invoicing is invoicing, no matter what industry you’re in or who your client is. You can use any program you like, but it generally should include the following: Company name and address, the client’s information (address, contact info), date(s) for services rendered, total charges due, and signature.
It’s important that your clients are aware of how much work you have done for them. This is a great way to demonstrate the value of your work and show them where their money is going. Don’t hesitate to send invoices when you’re supposed to, or follow up with clients who are late on payment—you have a legal right to be paid for providing professional services. Your clients will appreciate it if you bill them on time and in full.