Managing past due invoices correctly may increase your profitability. Your success in collections on past due invoices may depend on work done before you send invoices out. Decide how long you want to give your customers to pay invoices and then commit it in writing. The terms of the invoice should be clearly communicated to potential customers before doing business with them. As soon as a sale is agreed upon, you should create and send an invoice. Include the terms of the invoice typically expressed as “Net” followed by the time customers have to pay the invoice. Lastly, you should record this information in your company’s bookkeeping.
The Anatomy of an Invoice
Your invoice can be divided into three categories.
1. Information that never changes. This would include the invoice title, your business logo, and the name and address of your business
2. Information that changes sometimes. This could include your payment terms
3. Information that changes on each invoice. This may include the date, invoice number, contact details of the customer, the services or goods provided, the amount to pay, and the date to pay
You want your invoices to be concise and contain sufficient details that customers don’t come back to ask questions. Limit your invoice to a single page. If more information is needed, you could provide an invoice summary with added details on an attachment. Your invoice may need to include state taxes, depending on your location or the location of your customers. Creating, tracking, and collecting invoices is an important part of your business bookkeeping. Fusion CPA offers accounts receivable support and bookkeeping services to help simplify these collections on past due invoices.
Sending Late Payment Requests
Sending late payment requests is a part of bookkeeping you may not enjoy. But it’s usually crucial to the health of your business.The first key is knowing when invoices are overdue. Bookkeeping software like QuickBooks Online may be able to remind you and customers of pending invoices. You should not put off following up on unpaid invoices. Remember, you are not asking customers for a favor. A customer received something from you. They have to keep their side of the bargain.
Frequently review your business bookkeeping and look for pending invoices. It’s recommended that you tackle the oldest debt first. If customers aren’t paying because they are low on cash, you may recommend making partial payments. Your bookkeeping will be a little more challenging, but the extra bookkeeping work may be worth it if it means you get paid. You may stop supplying products or services to customers with outstanding invoices until the invoices get paid. This may signal the end of your business relationship with that customer, so it’s good to review your bookkeeping to determine if losing said customer is something you could live with. A last step could be writing off the invoice as a bad debt. This will require a little additional work, but it ensures that your bookkeeping reflects the loss of income.
Bookkeeping Services May Simplify Invoicing
As important as invoicing is to your business, it may be something that gets overlooked. For this reason, Fusion CPA offers accounts receivable support and bookkeeping services. We are here to help manage your invoicing and outstanding invoice collections for you. Trying to handle your own invoicing and bookkeeping may mean spending valuable time and energy that could be better spent growing your business. Our outsourced bookkeeping service may free you up to spend your time doing what you well, running and growing your business. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
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