If you’re a small business owner, you understand the importance of keeping an eye on your company’s finances. After all, knowing where every penny goes is critical for making informed decisions about future investments and strategies. One way to fulfill this goal is to invoice your customers correctly, every time, so they understand the services provided and to secure prompt payment for your business.
An invoice is a statement that money is owed from the business providing the goods or services to their client. This document states what was delivered, how much it costs for each item/service (including applicable taxes), and when the payment is due. You can learn more about what an invoice is with this previous article.
Creating an effective, systematized invoicing process helps manage client relationships while confirming that customers pay on time.
Fortunately, several methods can help you streamline the invoicing process to ensure that your business stays on a solid financial footing with a little effort. This article covers the invoice lifecycle, key elements within an invoice, leaning into automation, and the value of financial platform integration.
Lifecycle of an Invoice
The first step in creating an invoice is gathering all the necessary information. Match the name and contact information of the customer with the description of the products or services provided. Once you have all of this information, you can begin to enter it into an invoice template. Various templates are available, part of accounting software, or you can create your own. Once you have entered all the necessary information, it is transmitted to the customer for approval.
The customer will review the invoice and make sure that everything is correct. If any changes are required, this invoice returns to the draft stage.
After the customer has approved the invoice, it goes to the accounting department for processing. In this department, the invoice is reviewed for accuracy and completeness. The invoice is entered into the client’s accounting system upon receipt and acceptance, and payments are processed.
The final stage in the invoicing process is when the business that sent the invoice receives payment in full from the customer. In some cases, businesses may offer payment terms to their customers, such as net 30, net 60, or net 90. These terms mean the customer has up to 30, 60, or 90 days to pay. Once the payment is received, the invoice-sending business will update its records accordingly and close out the invoice.
When creating an invoice, there are several components to include to ensure it is precise and complete. Checking off these items will help avoid confusion and ensure the payment is quick and smooth.
Here are some of the key elements to include:
- Company Logo
- Company Address and Phone Number
- Invoice Number or Unique Identifier
- PO Number, if applicable
- Products or Services Sold
- Fees or Taxes
- Total Amount Due
- Payment Terms or Due Date
- Notes or Unique Message
- Acceptable Method(s) of Payment
Be sure to use straightforward, succinct language when describing the service; avoid jargon or technical terms that can be confused. By following these simple tips, you can help ensure that your invoices are clear and concise, making it easy for your clients to understand what they owe and expedite the payment process.
With the rise of automation in accounting, more and more companies are moving away from a manual accounts receivable process. The time commitment can be too much for employees to handle as they write everything down by hand. This technique often produces costly errors such as misclassifying revenue or improperly recording expenses.
In today’s digital world, we have everything right at our fingertips. That is why using an accounting platform that can automate invoices and payments can help businesses save time and money. The best platforms will allow companies to send invoices directly to their customers’ inboxes, track payments, and automatically apply late fees when necessary.
In addition, using an automated accounting platform can help organizations keep track of their revenue and expenses. This information is beneficial in managing finances and ensuring that your business is running smoothly. You will also reduce stress when taxes and financial statements are due. Overall, using an automated accounting platform can be a great way to save time and money.
FINSYNC operates a payments network that helps businesses that frequently experience a delay between the work complete and getting paid. We facilitate real-time payments so you can get CollectEarly™ on money earned. This is a game changer for cash flow management.
Accounting Platform Integration
An accounting platform can help to streamline your company’s invoices, making tracking your revenue and expenditures easier and wowing your clients!
One of the most important aspects of running a business is keeping track of payments and receivables to guarantee you have enough cash on hand to meet your financial obligations and avoid any costly penalties.
Here are a few benefits of using an accounting platform for your invoices:
- Track invoices and payments in real-time, making it much easier to stay on top of your finances.
- Get paid faster by transferring your invoice payments via ACH using just an email address.
- Make your work more efficient by duplicating an invoice that you’ve already sent out.
- Invoice your client for the hours you worked in an itemized format.
- Generate reports and analytics to help you make informed business decisions.
- Improve your customer satisfaction due to faster payment processing times.
- Manage late payments by setting up alerts and automatically charging and resending an updated invoice.
- A more efficient way to manage your finances.
- CollectEarly: Create an invoice through the FINSYNC Network and get paid early.
The customer’s experience should be easy and convenient. You can offer them a user-friendly system while also providing an efficient way of tracking bank transfers or credit card charges.
Eradicating the hassle of how you send your invoices and accept payments will make customers happy and keep them coming back. With features like automatic subscriptions, bank transfers, or credit card charges with tracking, it’s easy to see why so many businesses have chosen an integrated invoice system to simplify their accounting needs.
Learn more about FINSYNC’s accounting platform to keep track of all invoices and payments in one place instead of across different applications. You will simplify the invoice process and ensure stability in both short-term goals and long-term success.