While standard office applications, such as Word and Excel, can help you create invoices, you also have a higher risk of making mistakes when using them. Invoicing software helps you streamline your entire invoicing process and avoid these common invoicing mistakes.
1) Sending Late Invoices
If you’re like most small-business owners, you probably have a long line of tasks filing your daily to-do list. In fact, some business owners get so busy at times they completely forget to send invoices or send them out late. But if you want your customers to pay you on time, it’s important to send invoices in a timely manner.
When you use cloud-based accounting software, such as QuickBooks Online, it gives you the ability to send invoices to your customers automatically. Once you input your customer’s information, you have the option to create recurring invoices for clients. This automatically sends invoices to clients according to the invoicing schedule you design.
2) Not Knowing a Client’s Normal Pay Cycle
The easier you make it for your clients to pay you, the faster you get paid. You should try your best to ensure that paying invoices is as easy for your clients as possible. To do this, take your client’s normal payment process into consideration.
For example, if you have a client who only pays their bills on the first of the month, there’s a good chance your invoices will be paid on the first of the month, even if you send them on a weekly basis. Sure, your client may opt to pay you weekly to avoid late fees, but that’s not what’s easiest for them. Instead, ask your clients about their normal pay cycles before entering into an agreement with them. This way, you can set your recurring invoices to be sent to the client right before they pay their bills each month; you know what to expect in terms of payment, and your client doesn’t need to adjust their schedule to pay you. It’s a win-win.
3) Forgetting to Follow Up on Unpaid Invoices
How many times have you forgotten to follow up on a past-due invoice? It’s easy to do when you’re working with software that isn’t designed to track paid invoices. The good news is, invoicing software helps you follow up on late invoices regularly. It tracks invoices as they’re paid, allowing you to run a report that shows you which invoices are outstanding.
Online invoicing tools also typically let you set up a workflow process that automatically sends payment reminders to your clients when they’ve missed a payment. This makes it easier to collect on unpaid invoices. In most cases, you can set your reminders to go out as soon as the invoice is considered late. If your invoices are “due upon receipt,” you should consider sending reminder emails in specific increments. For instance, you might send a payment reminder to a client five days after the receipt of an invoice if it hasn’t been paid.
4) Not Offering Credit Card Payments to Customers
When you send invoices to your customers using software like Excel or Word, it doesn’t automatically give your clients the option to pay the invoice online by credit card. Of course, you could insert a link to available payment options into your invoice, but when you manually insert information like this into your invoices, it’s really easy to forget.
Invoicing software ensures your available payment options are included on every invoice. Once you link your accounts, you can set up your invoice template with the payment link inserted. This way, it’s included on every single invoice you send.
5) Not Choosing a System That Makes Currency Conversion Simple
If you conduct business outside of Canada, you probably spend quite a bit of time converting currency manually when you reconcile your accounts. Of course, when you work this way, you’re more likely to make a mistake. That’s why it’s important for companies that accept payment in multiple currencies to use an invoicing software that makes currency conversion simple. Ideally, the software you choose should have:
- Real-time currency conversion rates available
- The ability to automatically convert the currency into Canadian dollars when it applies the payment to the appropriate account
- The capability to handle multiple foreign currencies
- The ability to reconcile any of your foreign bank accounts
6) Not Adding Late Payment Fees to Your Payment Terms Section
A lot of small-business owners don’t charge their clients late fees, usually because they’re afraid of losing the client. But here’s the thing: Do you really want to work with clients who constantly miss payments?
Chances are, when you send an invoice to a client, you’ve already supplied the client with the products and/or services purchased. You deserve to be paid in a timely manner. In most industries, it’s completely normal to charge late fees — but you need to be upfront with your clients about them. This means you should include a blurb about late fees in your payment terms section. You want to keep your payment terms simple: A short sentence or two that tells your clients when late fees will be charged and how much they are should work just fine.
When you use invoicing software, you can create specific payment terms for your business. Then, all you have to do is choose to have your terms displayed on every invoice you send. Once it’s set up, you don’t have to manually insert your payment terms into your invoices.
7) Using Preset Invoice Templates
It’s common for small-business owners to use preset invoice templates they find online instead of creating a custom invoice for their business. But there are several reasons that creating a custom invoice template is a better option. When you use a pre-made invoice template, you might not be able to:
- Customize your payment terms
- Itemize your invoice items
- Use your company’s branding
- Offer multiple payment options
- Add short messages to clients
- Offer incentives for paying early on future purchases
8) Not Collecting the Right Amount of Sales Tax
GST laws vary by province, making it hard for small-business owners to keep up with at times. But when you use automated invoice software to create customized invoices for your business, it’s possible to set the system up so the right GST rate is calculated automatically for each invoice.
To do this, you have to first determine which goods and services are taxable. Then, set up your accounting software so it applies the right tax rate for your services for each province where you do business. This saves the information in the system. When you create a new invoice, all you have to do is choose the right selection for GST tax, and it’s automatically calculated and placed on your invoice.
9) Storing Credit Card Numbers
It’s common for business owners who use word processing or spreadsheet software to create invoices to store their clients’ credit card numbers so they can process automatic online payments. But this is a huge no-no. Instead, you should consider switching to invoicing software. This way you can set up recurring invoices for your customers without the need to keep their credit card information on file.
Ultimately, using software that lets you automatically send customized invoices to your clients can save you a lot of time and money. QuickBooks Online helps you create and send smart invoices that help you get paid faster.