One of the most important processes in a business is invoicing. This is the process whereby invoices are provided to the customers of the business. These invoices contain information about the goods and services that were provided. Invoices support and ensure one of the most important parts of a business, the cash flow. You can have a business that makes many sales and very good profits on paper. However, the business needs to get paid on time. These payments come from the customers and are requested for by use of invoices. A business needs to have cash flow so as to pay the employees, buy more inventory as well as support day to day expenses. As such, it is very important that customers pay you when they receive the invoices. How do you ensure this? Read on to learn how you can design an invoice that will encourage the customer to pay you on time.
How to write invoices that will get paid
There are three important factors if you want to achieve this. These factors include:
- Establishing rapport
- Define a process of payment
- Removing obstacles
Establishing rapport is where you state the details of the items or services that were provided, the amount that needs to be paid and stating the fact that the customer is required to pay for these goods or services. In this correspondence, the goods and services that were provided need to be stated very clearly. Moreover, this document needs to refer to the agreement of transaction as well as any and all terms of payment that were agreed upon.
It is also very important to mind the language that you use when you are writing the invoices. This is because this language can persuade or dissuade a customer to pay for the goods or services. In most cases, people write invoices in rigid or very serious language. This form of language is okay for middle-aged business owners. This is because they are used to formal language and formal settings. However, this language can put off younger millennials. This is because they feel threatened by serious, formal language. As such, ensure that you use the proper language and tone as you request payment from your customer through an invoice.
Define a process of payment
According to Parkinson’s law, any work that you do will grow and expand such that it fills out any and all the time that is needed to complete it successfully. This law also applies to the behavior of the customer. For example, the original document of agreement may have a due date on it. They may miss the date or forget it. Any documents that you send out and they have a due date that is more than a few days away from the date of receipt are quite likely to be forgotten.
To avoid this problem, you should conduct invoicing in short cycles. It is very important to provide the buyers with a notice before the payments are due. This notice prepares them to pay. It also gives them time to prepare any and all additional documents that they need. After giving notice, ensure that you follow up after the payment in short time frames.
Three days before a payment is due is the best time frame for such a notice. If the customer is still late in paying for the items, ensure that you send them a payment demand letter. Moreover, it should have a deadline. Always give them the option to contact you concerning payment. This way, they feel that you understand that they could be facing challenges in paying you.
Eradicate any obstacles to your payment
When the customer or client accepts that a payment is due, they have recognized your authority in the matter. Now, the next step for you is to prevent the emergence of excuses. The customers can even create dispute over the contents that are in the invoice. In most cases, this is an attempt to negotiate the prices that you have indicated in the invoice. You can do this after you send the requests for payment, but it is possible to do this within the invoice. This is how you can prevent sucha disagreement before it even emerges.
If you encounter some dispute between you and the customer, do not make moves to avoid it. You can include it in the process of receiving payment. Always be ready to discuss and renegotiate payment. It is much better to give a 10% discount than to lose a customer. However, if you use the proper language and indications in the invoice, it removes any possibility of dispute since terms for dispute negotiation are made in the invoice. These principles should be used in every type of invoice. This includes the proforma invoice.
What is a proforma invoice?
A proforma invoice is the initial invoice that is issued before the final, commercial invoice is accepted. It is not a replacement of the final invoice. It is simply correspondence from a seller to a buyer concerning a business transaction. In this invoice, the duties of the seller are indicated. Also, the obligations of the buyer are indicated. Both are guided by applicable commercial laws. With the signing and acceptance of the proforma invoice, the terms of the business can be considered set.
Details that are normally found in the proforma invoice include quotations of the prices involved, indicators such as quantity, condition, prices and dates. If the buyer wants to have any of these indicators changed, they can send a counter offer to the seller and a new proforma invoice can be created. This one would include the new terms as suggested by the buyer. If it is accepted, then it becomes a binding document.
Using the right tone establishes a connection and a line of communication. When you define the process of payment, you are able to get paid since everything is clearly set out. Eradicating the obstacles that could prevent delay payment; results in prompt payment. These tips and principles will help you turn your invoices into cash flow.