Are you about to launch your first business?
Do you feel like you have a handle on the financial side of things?
While you may have things like payroll and business tax covered, it is easy to place invoicing in the general paperwork pile.
However, having a clear understanding of invoicing is crucial for running a successful business, especially if you are selling goods or services.
To help you get your invoicing in order, here are some points to remember as you set up your payment system.
Create a Template
Creating a master template is the perfect jumping off point when it comes to organising your invoices.
Branding is important, whatever industry you work in, as it brings everything together, so it is important that an invoice sent to a supplier or customer is set out in your company’s font and includes the logo.
As well as ensuring your invoice looks like it has come from your company, it has to clearly detail the amount being invoiced for with the correct price.
Next to the amount should description explaining what you are asking them to pay for.
You should also include payment details, plus all of the legal details.
If your company is limited, for example, you will have to add in your Companies House number and address.
Check the Tax Details
In addition to the legal requirements, your invoices should also be numbered.
Not only will this help you keep track of your invoices when you have to fill out your tax return, but HMRC can check you have reported all of the payments made and received for the year.
HMRC also has strict rules about VAT. If your business sis registered for VAT, you will have to include a VAT number on your invoices and follow the guidelines on tallying up your VAT.
Set the Terms
You can choose when you want to be invoiced. It used to be accepted that payees had 30 days to pay the bill being invoiced for, but this has changed now. Therefore, you can include the expected payment date on your invoice.
Have a Plan
While you may have put a lot of effort into creating an invoice template that is clear and meets all the requirements, it is worth having a plan in mind so you are covered should a payment not come in on time.
One way to help to keep your business running while accounting for outstanding invoices is to introduce invoice financing in the form of factoring or discounting.
For example, invoice discounting allows you to continue chasing outstanding payments while using working capital released by the invoice discounting provider to keep your books balanced.