An invoice is your formal request for payment from a customer or client. That makes it one of the first things you should examine if you are looking to improve that rate which you are able to collect on your accounts receivable. Even the slightest tweaks to your invoices can produce dramatically different results, but there are a few specific ideas that you will definitely want to incorporate.
Make It Easy To Understand
The first key to getting the most out of your invoices is to make them easy to understand. This starts right at the top, where you should be sure to actually include the word “invoice.” This makes sure that the recipient understands that you are formally requesting payment and not simply informing them of an outstanding debt.
Another way to make your invoices easy to understand is to itemize as many details of the products or services you provided as possible. Breaking down everything that you are billing for allows the client or customer to easily understand how you arrived at a certain bottom line number.
Explain Payment Procedure
Another key to getting the most out of your invoices is to be sure to clearly explain the expected procedure for making a payment. Your invoice should attempt to answer any questions that the customer might have about making the payment. This should include what options are acceptable.
One of the most common invoice mistakes is neglecting to include details about where to send the payment or who specifically to make the check out to. The goal with any form of collection is to make it as easy as possible for the customer to make a payment. Including as much information as possible about making the payment is a great way to facilitate that.
This is also a good place to explain what will happen if the client fails to remit a payment. While you will want to remain polite, there is nothing wrong with stating that any debt more than x number of days old will be submitted to a debt collection agency in the US.
Make it Personal
The third idea that you might want to experiment with incorporating is to make your invoice more personal. Using the same stock invoices that everyone else sends is a sure way to get your invoice lumped right in with all of the other ones your customer is trying to pay. There is a good chance that your client receives many credit collection letters, so make yours stand out!
In order to differentiate yourself, try adding a personal message to the customer. This might only take a few minutes, but could have a dramatic impact on your relationship with that customer. There have also been studies that have shown that using different colors in your invoices can help to make them stand out from the crowd.
After implementing each of these ideas, it is a good practice to review your invoice in its entirety to make sure that each aspect of it sends the same message in a polite manner. Tweaking your invoices can be a great investment in the future of your business that actually pays dividends in the form of more positive cash flow. For this reason alone, you should constantly be tweaking and testing different invoicing options.