Home » Small Business Invoicing Guide and How to Send an Invoice
A vital component of the success of any organisation is the payment of the invoices they send. Many businesses issue invoices and bills to be paid to customers and clients, and the payment of those invoices is how their business will survive – and thrive – or fail.
Invoices were once only available on paper. The introduction of electronic invoicing (or e-invoicing) in recent years has completely changed how invoices are processed, advancing workflows and streamlining the procedure as a whole. E-invoicing produced about $8.74 billion in revenue in 2021, and $29.68 billion is anticipated by 2027.
Even though there is a growing trend toward e-invoices, more than a third of accounts payable departments still receive paper invoices, despite the fact that the average cost of a paper invoice error is $53.50. There is still a long way to go before everyone gets on board with the idea.
E-invoices are invoices that are electronically generated and sent from one service provider to the client in a standardised electronic format. There are numerous benefits to using electronic invoicing for both clients and businesses.
Instead of creating and printing paper invoices, the owner of a firm that offers clients products and services can generate e-invoicing automatically based on sales transactions. It minimizes the risk of billing mistakes. But as is the case for almost anything else in business, there are pros and cons associated with them and their use:
Convenience: Ink, paper, envelopes, and stamps aren’t a concern when you send electronic invoices to customers. Instead, you can generate and email the e-invoicing electronically.
Automation: You can automate the process of sending e-invoices to your customers who have recurring invoices, depending on how you pursue e-invoicing (e.g., accounting software). This will ensure you don’t miss any deadlines for creating and sending the bill, as you will not need to worry about that.
Time savings: Isn’t it tedious to print, mail, and repeat? Of course it is. Switch to the e-invoicing process and it becomes one way of saving some of your precious time.
Better record keeping: Rather than maintaining file cabinets full of paper invoices you can keep all of the invoices you send, along with the notations of payment, including when and how the invoice was paid, in one place on a central computer, or better still in the cloud.
Security issues: There may be security risks associated with customers without secure email addresses.
Spam filters: Email settings on your customers’ computers may result in your electronic invoice going straight to their spam folder.
Customer preference: There is no guarantee that all your customers will agree to receive an electronic invoice from you, and the hard copy may be preferable to some clients. Ensure that you communicate with your customers before you send them an electronic invoice.
As for legal requirements, as far as the CRA are concerned, profs in the form of e-invoices if needed are very bit as valid as paper invoices, and were you (or the client you issued the invoice to) be audited the CRA would happily accept electronic invoices as proof of whatever they are submitted for (prefers them in fact, as the CRA no more wants to deal with reams of paper than you do.)
There’s almost no good reason to physically mail an invoice. Nearly everyone has an email or a smartphone with some way to contact them. Here are some tips for faster digital invoicing.
1. Send digital copies of your invoice. An uneditable PDF at the very least creates a clear record and keeps everything transparent. You can also find free PDF invoice templates for Microsoft Word, Excel, and Google Docs, and Sheets on the web.
2. Automate with accounting software. There are several excellent small business accounting software solutions QuickBooks Online and Xero. Each can help you automate your invoicing in a way that is fast and easy to understand, and these softwares also make it easy to share records with your accountant on an as needed basis (which will save you lots of time at tax time.)
3. Follow up after sending your first invoice. Checking if your customer got your invoice and that they understand what it’s for can improve time to payment. It also shows that you’re serious about getting paid. Consider following up via text, email, or voicemail.
4. Send links to a payment portal tied to a merchant services provider. A link can take your customer to a payment portal handled by a secure, third-party, merchant services provider like PayPal or Stripe. This lets your customer pay immediately via a credit card, debit card, or automated clearing house (ACH). Some will also send automated invoice reminders via email.
Invoice creation can take a lot of time. Even if you’re just copying and pasting, someone in your office has to type customer information or calculate totals.
The way to save you and your people’s time is to use an invoice template. Certain information like your business information isn’t likely to change. Plus, a branded invoice can contribute to your company’s professionalism and overall image.
You can also use a free invoice generator. These work well if you don’t have the time or graphic design capability to create your own invoice template and most accounting softwares offer such functionality.
What exactly should be included on an invoice? We suggest all of the following (as they apply to you and your business of course)
The best ways to send an invoice are by texting your customer or emailing them. Email is the standard for invoices. But you can sometimes actually get better open and response rates by texting your customers a link to pay their invoice.
Before you send an invoice you’ll want to determine your customer’s preference for messaging. Knowing if they have an accounts payable department can also speed up the process.
You could save a lot of time by sending your invoice to the right person at the right time. Quoting a purchase order number or other relevant information in the subject line can help too.
Something else that can save you a lot of time and money, not to mention headaches? Working with an accountant. Whether it is tax time help, help in determining the best way to build your business financially, determining the best legal structure for a new business, or simply making sure that your books balance, an accountant can be an invaluable ally for any small (or large) business. Contact us today to learn more about just how we can help you.