48 per cent of UK’s small to medium-sized businesses are frustrated with delayed payments reaching their business bank accounts, an online survey from YouGov and ACI Worldwide has found(1).
- 33 per cent of respondents say late payments affect their ability to meet financial obligations on time
- 17 per cent feel late payments have a negative impact on staff up-keeping including salaries, expense reimbursement and recruitment
- 10 per cent note access to finance is limited for business requirements such as equipment, product development and research
Avoiding these five invoicing mistakes could help reduce the risk of overdue invoices in your business.
- Not addressing the invoice correctly
This may sound simple but can be a common mistake in businesses; make sure you include the right name for your customer, their individual name and the business name. Having the wrong name or business will mean a delay in payment as your customer will have to ask for a new invoice which is time consuming for both parties and can make your business seem unreliable.
- Providing an incorrect or unclear description
When invoicing a customer with your products and services, you need to make sure you’re describing it in a way that is clear for them to understand and not using terminology that is used within your business. Be as specific as you can with as much detail.
Remember, your business may be sending lots of invoices out and your customer could also be receiving a lot of invoices. Making it clear and explicit for them will speed up the time they pay you as well as making it easier for you to know exactly what you’re receiving payment for.
- Using the wrong price
This is one of the fundamental basics of invoicing and as obvious as it sounds, you’d be surprised at just how many small businesses do this incorrectly. If your customer has to query an amount on the invoice that they’re unsure of, that’s potentially another delay to your payment. Make sure you double check the price you’re quoting, either with the most up to date prices or the ones agreed with your customer.
- Including incorrect VAT
Include the right VAT rate for your goods and services, and make sure your customers are aware of which rate they should be expecting. If your VAT rate differs to the standard rate, clarify this with them in advance instead of waiting for them to query it. If you’ve just registered your business for VAT, make sure your existing customers know, or the increased charge could take them by surprise.
- Not including payment information
One of the most effective ways of encouraging early payment is to make it as easy as possible for your customers to pay you. If paying you seems like a hard or complicated task, they may delay this until they feel they have the dedicated time. Include all the relevant payment information and options as well as providing clear bank details or mailing address. Even more convenient for your customer would be the ability to pay online with just a click of a button, simply by providing them with an online payment link, they could pay you as soon as they receive the invoice.