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Sending out an invoice is essential when expecting payment from your clients. However, mistakes are likely to happen, especially when working in haste.
Such mistakes cause delays in payment. They can affect your cash flow and hurt your business. Here are a few invoicing mistakes that can affect your contracting business.
1. Failure to Show Courtesy
Even though your invoice is mostly about requesting payment, it doesn’t need to be cold or rude. Failure to demonstrate courtesy is one of the biggest invoicing mistakes.
Lack of courtesy slows down your payment. For instance, over 45 percent of invoices that use ‘Thank You’ in their payment terms are paid in less than seven days. 12.70 percent are paid in less than 14 days.
Consider adding phrases like ‘please pay by (date) and ‘Thanks for doing business with us’ to improve the success of your invoices. The words thank you and please can be magical.
2. Not Sending the Invoice Promptly
If you are in the contracting business, you should try to submit your invoices on time. Do not wait too long after completing a task. If you would like to receive your deposit upfront, send an invoice before starting work. You can request the balance after completing the job.
Avoid waiting until the customer asks for the invoice. If they are busy, they may not remind you about your payment. If you let the invoices pile up, following up on them can be difficult.
3. Difficult Payment Processes
If your payment processes are lengthy or hard to understand, your client may have trouble paying you. Whether you opt for online payment platforms or bank transfer, ensure that your client doesn’t need to get through hoops to complete a payment.
Consider availing a variety of payment options. That way, you can avoid late payments and billing errors. Having various payment methods increases your likelihood of getting paid on time.
If you are in the HVAC industry, try using a free HVAC invoice template to simplify things. If you rely on paper-based invoicing, you will always struggle with late payments.
4. Failure to Specify a Due Payment date
If you are new in the contracting business, you have probably made this mistake at some point. Sending an open invoice gives your client the freedom to pay whenever they want. Avoid being vague and let your client know exactly when you expect payment.
For example, you send out your invoice on the 2nd but expect to receive a payment within a week. Instead of saying that, specify that you expect payment on the 9th. Being specific about your payments reduces confusion and helps you predict your cash flow.
5. Failure to Itemize Your Services
Some clients don’t demand that you break down your services in detail. However, others require you to send itemized and detailed services. It would be best to itemize your services for easy tracking, reporting, and recording no matter what your clients want.
Make a habit of breaking down your service to avoid unnecessary emails and speed up the payment process.
6. Sending an Invoice With Errors
Before sending out an invoice, check for errors. Correct spelling mistakes and errors in your invoice number or date. Ensure that you have included all the important information.
No matter how experienced you may be, it is easy to make mistakes. The solution is to proofread your invoice before sending it out.
When you are in the contracting business, sending invoices to clients is the most important step towards getting paid. However, many contractors make mistakes that can delay their payments. Pay attention to the above tips to improve your payment process.