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Definition: An itemized list of goods shipped or services rendered, stating quantities, prices, fees, shipping charges, etc. Also known as a "bill." .
Once you've extended credit to your customers, invoicing them on a regular basis becomes your next, most important task when it comes to getting paid for your products and services. But a full 80 percent of all business's collection and payment problems are due to invoicing difficulties. Costly mistakes on invoices occur in several areas. The major errors are wrong addresses, wrong person billed, payment terms not spelled out, and due dates not clearly specified.
The invoice you send out should always be typed or computer-printed. Illegible handwriting accounts for many of the errors noted above. For clarity's sake, invoices should be written in terms that everyone understands.
If you invoice a customer on an irregular basis, always have the payment terms spelled out. If you do regular business with a customer, keep a "statement of account" that you send out monthly. A statement of account is simply a recap of all the invoices sent to a customer during a given month. This statement should list each invoice by number, date shipped, and amount due.
Whether you use a computerized or a manual system, be sure to stay organized and know how your system works. In a manual system, many business people lump all the invoices together, then spend time at the end of the month sorting them out. This system presents several problems. If you are a one- or two-person operation, there's a chance of losing an invoice or facing additional end-of-the-month bookkeeping problems that delay your invoicing. Remember that if you don't promptly bill your customers, they have the luxury of using your money interest-free.
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