Invoice management is a big deal no matter the size of your business. Without the right processes and systems in place, you can run into all sorts of issues.
Take for example a small business owner (whom we'll call Frank) who has a 2-person accounting team on hand full-time. Frank uses a paper-based invoicing system but never makes copies of the bills sent out.
This typically works out well for the company.
Until it didn't.
One day, Frank runs into an issue where an invoice is unpaid. He reaches out to the client only to find out they never received it.
Since he doesn't have copies on hand, he had to type up a new one and send it out. The only problem is, the client is a large corporation with an HR department, and so they ended up getting both invoices (unknowingly)...and paid for both.
Now, there's another issue -- the client is upset and wants the excess money returned. Frank now has to issue a refund, which never looks good on your records, and hopefully reconcile the relationship with the client.
He could've avoided all of this by simply making invoice copies.
But double payments aren't the only issue a business can potentially run into.
Let's take a look.
Non-Payment Due to a Lost Invoice
When you're using paper-based invoicing systems, you're at the mercy of your organization skills (and that of who else is working on your books).
When you send out an invoice to a client, it's critical to keep an eye on whether it's paid or not. If you don't catch the non-payment, it could end up hurting your bottom line -- especially if this happens often.
Let's say you don't have other documents that show the cost of the project. If months went by and you forget the details of the project, you may end up under-billing the client with your new guestimate.
Again, this is easily avoidable when you keep copies of your invoices.
You don't want this happening for considerably large projects.
Issues with Tax Agencies
When tax season comes around, you're going to need access to all of your invoices. Not only will you need them to calculate your business revenue -- you'll also need them as proof of your income.
Miscalculating these numbers on your tax return could result in you overpaying or underpaying in taxes. Trying to recover the amount you overpaid can be cumbersome.
And if you're found to be under-reporting due to poor record-keeping, then you could potentially land in hot water with tax collectors. In some cases, you may even get fined.
Thankfully, there are some ways out of this. Let's take a look at a few.
Keep Your Bank Statements On Hand
Besides having copies of your invoices, it's good to have records of your bank statements as well. This will help prove the income of your business, whether you have the saved invoice or not.
So what can you do to avoid these mistakes in the future?
Don't Be Like Frank -- Be Like a Cloud
Not literally -- but you should definitely resort to cloud-based services for invoicing. One handy tool you can use is invoicely.
When you go cloud-based, you maintain complete access to your invoices wherever you are.
Let's take a look at the various benefits of using cloud-based invoicing tools.
Keep Invoices Forever (Or Recommended Number of Years)
It's difficult keeping track of all the invoices you send out each year. Yet, it's necessary. In fact, depending on where you live, you may have to keep it for 4 to 7 years or longer.
Imagine trying to keep all of these documents on hand for so long. You'll need an entire room of filing cabinets, especially if the majority of your operations are paper-based.
To avoid all of this, you can use cloud-based invoicing. At least, this will cut down on the number of papers you produce in the office monthly.
Access Your Invoices from Anywhere
If you're connected to the internet, you can get access to any invoice you created and sent using your cloud-based platform. This means you can view and resend (and even create them) using a mobile device or desktop.
So whether you're flying in the air or overseas on a trip, as long as you're connected to the web, you can manage your invoices.
Use Professional Templates
You don't have to worry about designing the templates you send each customer. Just pick from one of the templates in your cloud-based invoicing software.
This will quicken the process so you can get paid quicker.
Make Client Data Management Easier
Another problem businesses run into is managing client data. If you're not making copies of invoices, then you could end up losing this information as well.
With an invoicing tool, you can easily track all of your contact details. Once you insert their information into an invoice, you'll have the option to save it.
Then it'll be simple to add it into any new invoice you make.
Besides going into the cloud, what can you do to improve your invoicing process?
Track Your Invoices with Analytics
This ties with the use of cloud-based invoicing because this tool allows you to track your invoices. In your dashboard, you can see which invoices have been sent, received, and opened.
You don't get any of this information when you're using a paper-based invoicing system.
With analytics, you can be sure your clients receive your invoice -- and if they didn't, you could easily resend it at the click of a button.
Minimize the Required Steps to Pay Your Invoices
You wouldn't have to worry about unpaid invoices being lost if you made the payment process simple. Sometimes, clients will put off making a payment because it takes too long or its inconvenient.
Most businesses today are using online platforms like Stripe, PayPal, and Mollie. So it's a good idea to offer these payment options.
Of course, you can do this easily when you're using a cloud-based invoicing platform, such as invoicely.
This allows you to accept online payments using credit and debit cards, PayPal, Mollie, Stripe, and WePay.
However, if you're insistent on using paper-based invoices, then you can use the following tips.
Keep Your Invoices in Chronological Order
You'll find this to be one of the best tips you can use to organize your invoices. If a client calls you and wants a copy sent of an invoice -- all you have to do is look at the recent section to find it.
You can ask them when the project was completed to find it faster. It's best to organize your folders by month and year to find invoices easier.
Use Spreadsheets to Organize Invoices
Another option for organizing your invoices is to go digital with spreadsheets. You can create one that includes the date, client name, project description, project completion date, invoice date, invoice due date, and the total of the invoice.
The more details you include in your spreadsheet, the better. You can use this to quickly find what a client owes and the date to look for when you go into your chronologically ordered invoice drawer.
Create Scanned Copies of Your Invoices
If you're a small business or an eco-friendly corporation, then you may want to find paperless means to maintain your invoices. In this case, you can scan all of your invoices and keep them in files on your computer.
Just be sure to back up the files because if there's a system crash, all will be lost. This is one of the upsides of having a cloud-based invoicing system.
If you decide to use this until you switch to the cloud, then you should create a folder to organize your invoices in chronological order. You can also create client folders.
You should consider emailing the scanned copies to your clients for faster delivery. However, there's no way to tell if they received it or whether they paid it unless you check your account.
With cloud-based invoicing, you don't have these issues.
Ready to Switch to Cloud-Based Invoicing?
Who wants to go through all the hassles of maintaining paper-based invoices? It's an unnecessary tree-killing practice that should be done away with.
Plus, you'll find you can run your business way better now that you have more organization in this critical department. What's better is that you can do it all yourself -- no need to hire a full-time employee to manage your invoices.
It's all automated so you can run your business optimally.
Getting paid fast is always a great thing in business. You can improve your odds of getting paid on-time when you use invoice automation.
So check out invoicely today to see if it's right for you and your business!