Invoicing is one of the most important elements of business on the whole. After all, this is the single thing that ensures you actually receive payment for the services you provide. Get this vital thing wrong, and you could be one of the countless companies dealing with unpaid invoices.
Cash flow problems can ruin an established company on a bad day, and can certainly contribute to the early closures of small businesses who are already operating on a shoestring budget. If clients continually get away with not paying, you’re also setting a bad precedent which, if word gets around, could see new clients underestimating your professionalism and generally trying to get what they can for free.
Neither of these are eventualities that a business should willingly face, and they point to one simple reality – invoicing processes must be a priority. And, as customer expectations grow, companies who use technology to manage everything from invoice creation to fee follow-ups tend to have far more optimal invoicing processes, and higher payment percentages, in general.
By comparison, the manual handling of invoices is fraught with errors, setbacks, and ultimately missed payment dates. In this article, we’re going to consider the worst mistakes that you might be making by handling invoices manually, and how tech is perfectly poised to help you overcome them.
The Mistakes of Manual Invoicing
# 1 – Incorrectly addressed invoices
Making sure that your invoices reach the right person is rule 101 of proper invoicing procedure. This is how you ensure that your invoices are promptly seen, stored, and slipped into the calendar of whichever business or client you’re dealing with.
Unfortunately, when invoice addresses rely on manual entry from one member of your team, there’s a real risk that they’ll either enter that address wrong or mistake the department or client who actually needs to handle the payment side of things.
The result? An invoice that either fails to arrive in time or is sent to entirely the wrong place and left in a pile of paperwork that could well sit around for months after your expected payment date.
# 2 – The toll of the typo
Typos are somewhat inevitable when you leave one busy member of your team to manage invoicing as well as, say, delivering those to-be-paid services in the first place. Those typos can range from everything from one missed letter in the invoice address, to entirely incorrect payment amounts, either of which are certain to look unprofessional.
In the former situation, you may also accidentally quote payments that are potentially less or more than the services you provided. Even worse, you can’t exactly contest a low payment when it’s been outlined by your invoice in the first place, especially if that invoice also served the purpose of a job quote before you completed any work.
Subsequently, one single missed zero could result in you paying more to complete a job than you earn from your efforts. If the word-of-mouth mill gets moving, you may also find clients outraged by your real fees considering the bargain you provided for their friend.
# 3 – A failure to follow up
We all have a lot on our plate during the working day; so we’re likely to send an invoice off and immediately move on to the next task. After all, we should be able to trust our clients to pay on time, shouldn’t we?
In an ideal world, yes, but those people are busy too, and so we forget, and they forget, and the invoice remains unpaid forevermore. Worse, there’s no guarantee that anyone in your team will actively remember the fact that an invoice hasn’t been paid, resulting in significant yearly losses that you might not be able to easily account for.
# 4 – A lack of knowledge about how to follow up
Let’s say that you have one team member whom you absolutely trust to follow up on invoices. Good for you. But, do you know the best manual tactics for getting this job done?
After all, committing one of your best team members to the task of lengthy phone calls and potentially hours of searching to find someone accountable for payment, may well end up costing you as much in productivity as the invoice will pay in the first place.
As a result, many companies who handle invoicing manually simply won’t bother following up small-scale unpaid invoicing throughout the year. And that can quickly see those smaller invoices adding up to a significant chunk of lost profits, and unfulfilled expenses, over just a few years of operations.
How can technology improve your invoicing processes?
# 1 – Automated addresses
The manual input of addresses undeniably leaves your invoices at risk from human error or a lack of client understanding. By comparison, the right software can automate invoice addresses that are far more likely to be right each time.
This is because, in most cases, invoicing systems can handle everything from address collection to automated input of an address that never suffers from even small typos.
As well as saving your team members time having to hunt down the right people, this can make you look far more professional, and ensure that your invoices arrive on time and ready for payment, every time you send one out.
# 2 – Say goodbye to typos
Key pieces of invoicing tech like document generation software enable businesses to streamline and automate processes like invoice creation.
Instead of relying on team members who are at risk of making minor but costly mistakes, this kind of software makes it possible to automatically input things like job costs, material breakdowns, and all-important invoice payment dates onto your basic invoice template.
All of these can help you to ensure the inclusion of accurate, concise, and uncontestable invoicing information, even if you’re invoicing multiple clients at one time.
# 3 – Let follow-ups take care of themselves
Manual follow-ups are painful and inherently risky, but there is a better way. By automating invoice follow-ups like due-date reminder emails or late payment notices, companies can overcome the hassle of follow-ups, and make sure that you never miss a payment date before it’s too late.
Due-date reminders that you can create in most email marketing tools can be particularly useful for keeping clients in the loop and making sure that they’re always aware when payment is needed. If those same clients then miss that payment date, you’ll have every right to send immediate missed payment notifications and will be able to set up another payment date far quicker than you might otherwise.
# 4 – Cost-effective ways to chase even small invoices
As mentioned, chasing an invoice can be incredibly costly, leaving countless companies unable or unwilling to follow smaller missed payments. Key software removes the need to dedicate any real-time, energy or resources to ensuring that clients adhere to invoice stipulations.
Instead, email marketing software can do the chasing for you, while an invoicing program can provide everything from payment tracking to payment notifications so that you know without having to worry who’s paying, when they’re paying, and how much.
If you do ever need to dedicate team members to this task, invoicing software that shows things like due or overdue invoices at the click of a button can also halve the time necessary to understand what’s what with your invoicing, and the right actions to take in either instance.
Do you need technology to transform your invoicing processes?
We know what you’re thinking – companies were able to handle their own invoicing for decades before things like invoicing and document generation software came to the fore. So, do you really need to spend on tech of this nature?
The simple answer is that, yes. You really do. While there’s no denying that companies have traditionally handled their invoicing processes manually, they haven’t necessarily done well while doing so. Remember, around a huge percentage of invoices remain unpaid across average companies. But that number has been lowering in recent years, and that is all thanks to the use of the right technology.
There’s also no excuse not to get this right considering that you don’t necessarily need a complex software stack to manage it. Instead, stepping away from manual invoicing requires relatively simple, and largely automated, software like financial programs such as Quickbooks, document generation SDKs, and a basic program for automated emailing. Taken together, these key pieces of tech can help you to manage –
- More cost-effective invoicing
- Reductions in missed payments
- Increased invoicing professionalism
- Automated invoice management and follow-up
- And more
All of these benefits remain unlikely with manual handling. Not to mention that, as more companies automate at least some elements of their invoicing processes, the manual mistakes listed in this article will become even more obvious and damaging. So, make sure that your invoices don’t get stuck behind the times. Get ahead by considering how invoicing tech could help you moving forward.
