7 common mistakes that small business owners make in their invoicing

Invoicing is an important aspect of running a small business, and though it seems simple, it’s important to create a system so that mistakes don’t happen. When you’re juggling more than one client and focusing on giving each client the best possible service, proper invoicing can get forgotten in the shuffle.

If you can afford it, consider hiring a bookkeeper to be responsible for sending out invoices and collecting payment. Otherwise, dedicate time in your schedule for invoicing. Shut off your phone, turn off social networking sites and other distractions, and concentrate on sending out bills and following up with clients who still owe you money.

Also, take note of these 7 common invoicing mistakes, so you can be careful to avoid them:

  1. Not creating professional invoices – Each invoice should have your logo, contact information and website address. Put some thought into the header and footer of your invoice, to remind your clients who you are and why you stand out from other businesses. The text of the invoice should use professional language, though; marketing should be limited to design. If you use electronic invoicing, choose a software that allows you to upload your logo and other information. Creating professional invoices is a one-time effort, so give it a few hours of your time and reap the benefits for much longer.
  2. Not itemizing – Don’t just send a request for payment, remind your client what he is paying for. Clients don’t always remember what their original agreement with you was, and they don’t want to waste time going through their files to figure it out. So send them an itemized bill, listing exactly what they are paying for. Depending on your style and the client’s personality, it can be extremely detailed (“500 word article about the economy of Egypt”) or broader (“article about Egypt”).Each item should be on its own line with its own price. Below, calculate the total and then add taxes where applicable and a final amount for payment.
  3. Forgetting to proofread – Check your spelling, grammar and typos. Make sure your amounts are right and that they are in the correct currency. Mistakes make you look unprofessional. Worse, you could end up getting paid the wrong amount, or the right amount in the wrong currency! Or your client will call you up to let you know your invoice was unclear, and by the time you sort it out you have wasted valuable time and payment is delayed.
  4. Forgetting to invoice – You may be busy and preoccupied but if you don’t send out invoices the client will not magically remember to pay you. It’s important to invoice as soon as the project is completed or at the agreed upon time for payment. When the work is fresh in the client’s mind, he is more likely to pay in a timely manner. The more you drag it out, the more likely it is that the client will drag his feet when it comes to paying.
  5. Neglecting to add a due date – Every invoice should have a “payment due by” date. Don’t write “payment due in 30 days” because that is a meaningless deadline which will soon be forgotten. Instead, write an actual calendar date. Consider offering a 5% discount if the client pays by an earlier date (you can tack it on to the original price).
  6. Not following up on invoices – You sent out your invoice but payment hasn’t arrived. Send an email, make a phone call, find out why payment is being held up. Speak directly to the person in the company who is in charge of managing the finances and has the authority to make payments. Ask if you can facilitate payment by offering to take a credit card, Paypal or an installment plan.
  7. Sending the invoice to the wrong person – Make sure you are sending the invoice to the right person in the company. Your contact may not be the one managing the bookkeeping; ask her where to send the invoice. And double-check before you hit send that you don’t send an invoice to one client which is meant for another. Not only can that be embarrassing; it can cause a legal problem if you have accidentally disclosed private information about your contract with a client.