It’s important to be proactive about your business accounts and send out customer invoices as soon as possible. Keeping on top of your invoicing responsibilities also means ensuring that your sales and income records are accurate and organized for your business’s accounting and bookkeeping operations. It also means you can increase your business’s cash flow as you’ll be more likely to be paid on time by your customers.
This article will discuss the purpose and use of invoices and the most opportune time to send them to get your customers’ attention and pay their accounts quicker.
What is the Purpose of an Invoice?
Invoices are used to track the sales of your business’s goods or services and collect money from your clients. An invoice illustrates what a customer has bought from your company and how much they owe for it. This document includes the payment terms of the sale, as well as the payment due date. Invoicing and billing is an essential part of making money for your business.
This accounting document also serves as evidence of a business transaction. Therefore, you should always promptly log these sales accounts into your bookkeeping records for income tax purposes.
How invoices can help track inventory
Invoicing can help your small business keep track of your inventory, documenting the sales of various products or goods. Once an invoice is created, the details are recorded in your accounting books. This will need to reflect the current state of your ledgers, as well as your inventory.
These source documents provide evidence of what’s been sold in the last weeks or months, illustrating the products or goods that need to be restocked in your inventory.
To learn how to construct and write an invoice, check out QuickBooks free invoice template for all types of businesses.
When to Send an Invoice
Depending on the situation, businesses will send out invoices before, during, or after a project is completed or a product order is fulfilled. But how can you tell which one works best for your company?
These days it’s typically best to email your customers with their invoice. Electronic invoicing is the most used form of payment for businesses in the twenty-first century. It offers fast and easy payment options for the customer and increases cash flow for your business. Learn more about the different methods of sending invoices for your business
You will need to consider what type of work your self-employed or small business does, and the payment time frame you want to give your customers. You should also keep in mind your recurring invoices- do these happen weekly or monthly?
Invoicing at the start of a job
Sometimes sending an invoice before you’ve started the job or gotten the product order together can be a good thing. It shows your customers you are prepared and proactive about your work.
However, problems could arise if you’ve under invoiced the job. This means that the invoice’s amount does not fully cover the cost of labour and other project expenses by the end of the job’s completion. At that point, do you send another updated invoice? What happens if your customer grows angry at the added fees when they were expecting the original amount?
For product orders, this situation might not be as much a problem if you know the going price for your goods and delivery charges as usual. You’ll know the accurate price to state on the invoice without worry that you are undercharging.
Periodic and progressive invoicing is a common occurrence for businesses working on extensive and ongoing projects. For many construction companies, this is one way to stay on top of payments while also freeing up cash flow for the current project and other responsibilities. Just don’t forget to forward these invoices at the right time; otherwise, you could fall behind on the project or your business’s other expenses.
Other times, recurring weekly and monthly invoices are the perfect options for businesses that offer monthly services or subscriptions. If your company provides routine contracts or has a loyal customer base, monthly invoicing offers a consistent form of receiving payment.
At the end of a calendar month, tally up your accounts and create your monthly invoices to send out at the beginning of the following month.
Invoicing at the end of a job
Sending out an invoice once the job is completed is the most popular and ideal time for many businesses and customers alike. Ensuring the client is satisfied with the finished project or product before invoicing them can help build a relationship with your customer base.
Once the job is completed to their satisfaction, send out the sales invoice within twenty-four to forty-eight hours afterwards. Emailing the invoice at this time means your prices are accurately calculated, you won’t forget to do it in the future, and the customer can pay their account while feeling satisfied by your job well done.
What is the Best Day of the Week to Send Out Invoices?
Suppose your self-employed or small business typically sends out invoices every week. In that case, you’ll want to consider which day of the week is the most advantageous for you to get paid. It’s a good idea to send your invoices out at the beginning of the week.
Stay away from sending invoices on a Friday, as your email could get buried in your customer’s inbox over the weekend. By the time Monday comes around, they might not even see your email.
Therefore, sending a business invoice should typically happen on a Monday or Tuesday, or even a Sunday. As the week gets underway, many people are more attentive to their responsibilities, meaning they will be more likely to pay your invoice as soon as they see it.
Ticking off your customer invoice list at the beginning of the week also means you completed an essential activity for your business, which is a win in itself. You won’t forget to do them later in the week, as they are already done! It also means you’ll have more time to chase down late payments before it starts to affect your business’s cash flow drastically.
That being said, some industries have various workdays that will be the most advantageous for them to email or mail out invoices. It all depends on your company’s workflow and your customer base and their weekly and monthly routines. Hence, it would be best to consider these factors when deciding the perfect time to send out your business invoices.
Automatic Invoicing with Accounting Software
Stay on top of your invoicing and billing with accounting software that does it for you! One of the best ways to ensure your invoicing is employed correctly and sent out on time to your clients is using accounting software like QuickBooks online.
QuickBooks offers small businesses and self-employed individuals the ability to customize branded and consistent invoices, with scheduled invoicing and automatic tracking of payments. This invoicing software will also track your customer’s accounts and send out reminder emails without your prompting. Your unpaid invoices won’t fall by the wayside, and it’s one less thing you won’t have to worry about.
Creating the proper invoicing routine for your company will ensure you get paid routinely and promptly. Arguably, sending out invoices is one of your company’s most important responsibilities, as it’s what allows you to get paid for your hard work. Therefore, it is vital that you keep on top of these accounting documents as your business depends on them.
With progress invoicing, automatic scheduling, and real-time alerts, QuickBooks Online makes the invoicing process efficient and easy for your small business. Leave the invoicing and record-keeping to this accounting software, and you won’t be sorry. Try it free today.