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.