How to Make Invoices for Your Small Business
Preparing invoices might be one of the most important tasks you perform as a small business owner. After all, business invoices are the first step in generating the income your business needs to run smoothly – not to mention help you pay personal bills like mortgages and health insurance. When small business invoices are done correctly and professionally, sent promptly and followed up on regularly, your cash flow will be healthier.
What you don’t want is to have a slew of business invoices that are not getting paid: The average small business is waiting for about $5,000 in overdue payments every month.
Implementing good invoice habits and a billing process helps ensure you’re not sitting on a bunch of unpaid invoices and minimizes the need to maintain records of late payments for you to follow up on.
Good billing and invoicing software makes it easier to send invoices, receive payments and see helpful reporting so you are aware of overdue invoices and know who owes you, how much they owe and when they should have paid you. Having detailed customer invoices also helps you avoid disputes with clients about what they’re paying for and when. As tax time rolls around, invoices and payment records will help you quickly round up income data for your accountant.
Small business invoicing do’s and don’ts
Invoices are one of the ways you can impress customers with your professionalism and timeliness. Every point of client interaction is a reflection of how you do business, so make the most of this opportunity.
- Do avoid surprises
Make sure your customers know ahead of time when an invoice will be sent. Clearly spell out the charges and itemizations to avoid confusion. Your business invoice should match your original estimate and contract, which conveys predictability to your customers. If the invoice total exceeds the estimates or the agreed amount, or there are new charges, explain the difference to customers before you send the invoice.
- Do get dates straight
The invoice’s date should be the first thing visible after your business logo and contact information. The date should be prominent, letting customers know when the payment is due. Also, make sure that dates for completion of work or delivery are part of invoice item descriptions.
- Do follow up on overdue invoices and payments
If you haven’t heard from your customer after sending an invoice, follow up with payment reminders. Sometimes mailed invoices can get lost, and emailed invoices can end up in a customer’s spam folder, innocently causing a late payment. Once you know that a customer has received an invoice, start tracking the days and weeks until your payment due date, which should be clearly stated on the invoice (15 days, 30 days, etc.).
Clear payment term with a deadline is essential because it gives you a basis for follow-up in case of nonpayment. If you don’t clearly state the expected payment date, it’s easy for customers to put your invoice at the bottom of their bills pile. When the due date has arrived with no payment received, resend your invoice and add a note that it is past due. Small business invoicing software can assist by automating reminder emails.
- Make sure your invoice design provides clarity
An invoice is an important public face for your business to your customers. It should showcase your brand and include identifying features such as your logo. But the content is more important than the visuals – an invoice is not the place to get cute. Make sure that above all, the information is clear and easy to understand.
Using an invoicing software like, American Express® Payment Accept allows you to include your own personalized branding while ensuring all of the necessary information is laid out clearly on a custom invoice.
- Make sure your invoice is detailed
In some areas of customer communication, less may be more – but not when it comes to small business invoicing. Listing itemized products or services, fees, expenses, costs and relevant dates not only reduces disagreements but ensures you’ll be paid what you deserve and that your customer understands the value you’ve delivered.
- Don’t be timid about sending business invoices
Asking for payment can feel awkward, especially when you’re just starting out in business. When you confidently seek payment for your services, you show customers that you value your own work and believe in the products and services you’ve delivered. You’ve already won business because customers have asked for your goods and services. The invoice shows that the work has a real-dollar value.
- Don’t delay
Don’t invoice too soon – that is, before an agreed-upon milestone has been completed, the project is complete or the product is delivered – or too late – weeks or months after you’ve wrapped up work. Customers should receive invoices while the product or service is fresh in their minds, so that the invoice isn’t an unwelcome surprise. Invoicing promptly displays professionalism and confidence, and sends the message that you likewise expect prompt payments.
What to include on an invoice
Every invoice should have the following information:
- Invoice number
A unique number – like #5-2019 – helps you keep track of how many invoices you’ve sent a client. Also, in the event an invoice goes unpaid, it’s easier to track down which one by searching for the number. Numbering invoices can help your customer find missing invoices and payments as well. And, come tax time, numbered invoices will help you avoid missed income data.
- Your business’s contact info
Include pertinent information for your business, or if you have a bookkeeper or other accounting contact, include that person’s name and contact information. That way, if customers have questions about invoices, they can quickly reach out to the right person.
- Recipient contact info
Whenever possible, address your invoice to a specific person, including name, email address and phone number. In the event of nonpayment, you can follow up with a real person instead of a department.
- Business tax ID
Your customer may need your Tax Identification Number, or TIN, for their accounting purposes. Make sure you provide it proactively to minimize a late payment.
- Invoice date
Clear and obvious payment terms and dates for the purchase or service, for the invoice sent and the payment due will keep everything clear for your customer and let them know how much time has passed between invoicing and payment.
- List of charges
Include details of what you are charging, noting the differences between product costs, supply costs, hourly charges, or transportation expenses. Include details like descriptions, dates, and locations associated with charges, as appropriate. This will make it clear to the customer what they are paying for and how you arrived at the total and will also make it easier for you or your accountant to reference invoices at a later date.
- Tax line
If your business has to pay local or sales taxes on goods and services, break out these amounts on a separate line and include the tax rate percentage.
- “Total Due” line
Make sure this line is hard to miss – consider using bold type for emphasis.
- Preferred payment method
If you want the payment made by credit card, check, ACH payments or via online payment services, make sure you express this on your invoice. Providing an electronic invoicing option for your customer to pay online with a credit card is a great way to get paid quickly while the invoice is still top of mind.
If you’re considering using an invoicing service to accept credit card payments, make sure to check any fees you may incur and how often. Research and compare all options before choosing a service to work with.
Thankfully, some companies, like American Express® Payment Accept, don’t charge a setup fee, a monthly fee, or additional fees, and they don’t require long-term contracts. You’ll only pay when you get paid, making your invoicing process much easier both for one-off and recurring payments.
A personal touch
It’s never a bad idea to thank customers for the opportunity to do business with them. You can also add a message about contacting you if they have questions or concerns.
How to generate and send business invoices
Do you wonder if you should send a paper invoice, or send the invoice electronically with online invoicing? The easiest option is to generate invoices using invoicing software or an invoicing app. Printing or emailing manual invoices created in word processing software comes with many downsides, including lack of expense tracking and reporting, manual calculations. Printing also increases the waiting time for check or cash payments. For example, a significant benefit of digital invoicing is “digital trails” that tend to be more reliable than “paper trails.” It’s easy for you or your customer to lose a physical invoice and have no other record of it.
When you generate electronic invoices – especially if records are stored online in the cloud – the files are easy for you or anyone else with access to the system to refer to when needed.
Digital invoicing tools can integrate with financial, accounting, inventory, and other software tools, making it easier to create, access and track your full business processes, as well as collect necessary information, come tax time.
Digital invoicing tools also offer an invoice template that you can easily customize for your business. This ensures that your invoices maintain a consistent and professional look and represent your brand well.
One of the significant benefits of electronic invoicing is the ability to allow your customers to pay by credit card from anywhere. Most invoicing software offers this feature for a cost. Credit card or ACH payments may allow you to get paid faster since there’s no need to mail an invoice and wait for a check to arrive.
Also, since payments are processed electronically, there’s less physical cash to manage, which is easier and safer for your business. Finally, you’ll have fewer billing processes to handle and greater visibility into your company’s cash flow.
Fortunately, products like American Express® Payment Accept make it easy to send digital invoices to your customers. You can create personalized invoices via email or web and send customized links through text, email or web. Plus, American Express® Payment Accept offers next-day deposits* — so you can get your funds faster with unlimited invoicing.
Whatever method you choose, avoid simply dropping a list of charges in an email. It’s not a very professional presentation, and it’s too easy for information to get chopped up or lost as the email gets forwarded to the right person for payment.
It’s also important to know where your customers are in the payment process.
Don’t assume that customers:
- Are happy simply because they paid an invoice. Right after receiving payment is the right time to reach out with a thank you or an offer to do future work.
- Are expecting your invoice. Only send invoices when customers acknowledge that they’ve received all goods and services, or when an agreed-upon milestone has been reached.
- Received an invoice. If you haven’t enabled confirmation of receipt, or heard from your customer, check in.
- Will pay promptly. It’s up to you to make payment terms and deadlines crystal clear.
- Expect you to raise prices occasionally. Tell customers before invoicing if there are higher charges than expected, or that they’ve seen in the past from your business.
A professional invoice is good for your (business) health
Business invoicing isn’t just paperwork. It’s vital to the health of your business, since your invoicing practices have a direct impact on cash flow. Consider investing in beneficial invoicing tools, like American Express® Payment Accept, that will help you follow the best practices above, and you should see a steady increase in your business funds – money you can use to grow your business. American Express® Payment Accept is your payments and invoicing solution.