6 Ways Invoicing Supports Business Growth

A good number of business owners will confirm that they started their businesses to gain financial freedom while chasing their dreams. This might seem like a difficult decision to make especially if you are leaving a paid job to start your own business from the scratch

 Small business owners are usually actively involved in the daily operations of their businesses. They need to focus on growing the business; this is why they learn everything about the business operations to enable them to carry out proper monitoring and assisting their employees to become better at their jobs. The main focus of every business owner is to grow the business by generating higher cash flow. This means using many business strategies which will include the use of invoices when dealing with clients.

 To get the best benefits from using invoices, the business owner first needs to know how invoices could be used to improve their business. It is important that every business owner knows this information about invoices.

1.  What is an invoice?

 An invoice is that legal document sent to a client from the business owner or service provider after a service has been rendered. An invoice contains vital information which describes the service that was rendered, the goods supplied, their individual prices and total bill due to be paid off by the client.

The terms of an invoice are usually non-negotiable. Any changes made must be after an agreement has been reached by both parties and an endorsement made on the invoice sent out indicating an alteration in the prices or services outside the terms and conditions that apply.

 In financial terms, the business owner records any invoice that is sent out to the client as a sales invoice, while the client records the invoice received to represent a purchase invoice for proper filing to be done.

The business owner expects to receive a payment equal to the value indicated on the sales invoice while it is the responsibility of the client to ensure this exact value as indicated on the invoice is paid to the client through the agreed method of payment.

2. Invoices are more effective when they communicate clear information.

 It is very important for every business that has clearly defined terms and conditions which will be a guide for clients to understand the services being rendered and what they should expect to receive as the value worth for their purchases.

The following statements should be considered while drafting the terms and conditions for your business:

•             would you require upfront payments before you render a service? What percentage of the total amount billable would be required as upfront payment?

•             What is a reasonable time frame for a payment to be made?

•             decide on the value you would set as a late fee penalty. You could choose a standard amount or a set a percentage of the total amount for the service.

•             How would you like to be paid? You could also indicate your preferred choice of payment.

 When these terms have been clearly written out in simple and easy to understand English, there will hardly be any delay in payment as a result of the client’s inability to understand the information contained in the invoice.

3.  Study the guidelines for invoicing that apply in your clients’ country.

 Dealing with clients in other parts of the world makes it necessary to understand the regulations that guide invoicing in those places. It is important that you understand these terms to avoid and break which will delay your payment.

 The business system operated in America does not make it mandatory for businesses to send out invoices to their clients. These invoices attract different types of sales taxes, to get accurate information, it is best to seek the opinion of a professional accountant.

In countries like Canada and Australia, there is a Goods and Services tax (GST) which is calculated based on the amount on the invoice. This applies to purchases made from foreign countries.

 In the EU, these transactions attract VAT. The VAT charges vary among the EU member states. This means the applicable charge in each state should be known before invoicing is done.

Before foreign transactions are initiated, it is a good decision to find out the tax laws and regulations that guide invoicing in those countries. This information can be obtained from accountants in this field or tax lawyers who handle foreign transactions.

TIP: If you do not want to dig into all specific rules and check the information, you simply could use an invoicing software. Inv24 is a good choice to start your invoicing experience.

4.   Be conversant with the important aspects of your invoice

 The structure of invoices vary due to the different regulations that apply in different countries, however, there are some similar features on all invoices generally. They are as follows:

•             The seller’s personal information like full name, official logo, address, and contact phone numbers email address, social media accounts etc.

•             There should be a clear indication on the document that identifies it as an “Invoice.” This will prevent any confusion when it is received by the client.

•             Each invoice must have a unique number and date for reference purposes.

•             The client's name and contact information accurately indicated on the invoice.

•             A comprehensive description of the goods or services sold and the date of delivery, quantity supplied and unit prices.

•             A clear impression of the total amount due to be paid and any accrued tax charges. The time frame within which payment must be made. This is usually within 14 or 30 days.

5.  Invoices can be part of your marketing strategy

 Apart from the regular information that is characteristically featured on invoices, they can also be used as effective marketing tools to create more awareness about new products and encourage your clients to introduce other potential clients to use your services.

This can be done by including this information on the spare parts of an invoice; this works better for online invoices. The following information could be included:

•             An advert for referral bonuses which could be claimed by existing clients when the potential clients they have referred eventually make a purchase or use the services.

•             Clients could be nudged to give reviews after they have received satisfactory services.

•             Invoices could be used to improve the feedback system you have set up for your business. This way, the client will indicate areas of your services that could be improved.

•             Clients could also become aware of loyalty rewards in form of coupons and discount codes they will benefit from when a repeat purchase is made.

6.  Setting up automated invoicing system

An automated invoicing system takes away the stress of manually keeping up with the figures and payments. This can be confusing and also very tedious. When mistakes are made, the financial consequences can hinder business growth due to the losses. An automated invoicing system is convenient and easy to use. They are also easily adaptable to different kinds of businesses.

 These systems are backed by adequate and reliable cloud storage platforms which securely keep data and invoices for future reference. The use of cloud storage also makes it possible for these files to be accessed from any part of the world without having the carry around huge files when you travel around.

The best part about the automated invoicing software that works with a cloud-based storage system is that they are easy to use. Small scale businesses and freelancers will find them very convenient to use because invoices can easily be made up for clients in a few minutes compared with the time it would have taken to manually prepare an invoice in the office.

As much as invoicing is crucial for business growth, it can also be a time-consuming and very tedious process. Business owners and freelancers could effectively free up more time to focus on revenue generation and business growth if the ideas in this article are properly implemented in their invoicing system.