Is accounting 101 standing in the way of your business dreams as you are Business Beginners?
Let’s start with the basics for Business Beginners.
You don’t need to be a CPA to understand basic processes like accounts receivable, cash flow, and balance sheets.A vital element is invoicing.
Whether you’re buying or selling a service, you must be well-acquainted with invoices.
But, what is an invoice? What is the right etiquette or process for invoicing? How do you make a freelance invoice?
Learn how to write an invoice and more in this quick beginner’s guide!
What Is an Invoice?
By definition, an invoice is simply a bill for services rendered. A restaurant receipt is technically a type of invoice because it documents a transaction. However, the term is usually exclusive to business transactions.
Invoices come in different forms and templates; however, the provided information remains the same.
You should find the following data at a minimum:
- Name of the business or seller (vendor)
- The vendor’s contact information
- The service or good charged
- Quantity of goods
- An invoice order number
- Date of invoice
- Description of services (or goods)
- Itemized goods
Plus, you can use your invoice template to your own marketing advantage.
Branding your invoices with your company color, colors, and slogan reinforces your brand in customers’ minds. Plus, it helps maintain brand consistency.
All invoices should be paid as quickly as possible. However, most B2B customers have up to 90 days to pay their invoices. Once the grace period lapses, the vendor can send your bill to collections.
Plus, waiting the full three months to pay hurts vendor relationships. Furthermore, if the invoice is paid within the month, you miss out on special discounts, like free freight.
Worse yet, vendors can choose to end their working relationship if late (or nonpayments) continue.
Managing Your Invoices
Accounting mismanagement is a common reason behind late invoice payments. Plus, invoicing itself is negatively impacted by disorganization.
Hiring an accountant is the best way to go. However, solo entrepreneurs and tiny businesses could use accounting software alternatively. Switching to digital billing also mitigates problems with lost bills and receipts.
Automated reminders also prevent bookkeeping disasters. They also provide a digital trail for year-end accounting.
For starters, all recipients should receive an email receipt after purchasing goods. Email confirmations also serve as invoice copies. Buyers should also receive instant email notifications after paying their bills.
Alternatives to email include SMS (text) messaging and vendor customer portals. If you’re a vendor, you streamline payments quicker through your website.
Start Improving Your Invoicing Process
Now that you know the answer to the question: “What is an invoice?”, you’ll be better prepared to avoid a potential disaster when implementing a new free invoice template invoice system. Improve your template, set payment times, and communicate to prevent losses.
Remember these tips as you optimize your entire billing process and business model. Additional free resources are also available to help. Don’t forget to follow our blog for more handy tips and tricks.