Guest post by Kristie Wright.
In any business-to-business (B2B) relationship, an invoice is one of the most important documents for both parties. Without a proper invoice, a client may not be able to pay the correct amount, or pay on time, or even pay at all. When a payment isn’t made or it’s late, your business will suffer the financial repercussions.
If you’re not including the correct details on your invoice or there’s an issue with its format, layout, or style, you may find that your customers quickly lose patience. In time, they’ll seek out other businesses that have proper financial processes and supply invoices that don’t require them to jump through hoops to settle.
Here’s a complete guide to business invoice design, to ensure that your invoices retain clients rather than repel them.
Clarity: The Power of a Clear Invoice
Invoices are first and foremost financial documents. They need to include concise details, easy-to-read fonts, and a sensible layout. Without clarity, those who receive your invoices may become confused, which increases the likelihood of a late payment.
To enable your clients to pay you properly and on time, you need to provide them with all the tools and information necessary for doing so. Any business receiving your invoice should have no questions regarding what they’re paying for, whom they’re paying, how much they owe, and when they owe it.
A typical invoice includes the name and contact details of both the sender and the recipient, the current date and expected payment date, a clear list of the products or services in question with their corresponding costs, and the correct payment information.
A Complete Costs Breakdown
One of the most important components of a legitimate invoice is the list of services or products provided and their individual costs, plus the total cost of them all combined into one.
This informs the recipient of exactly what they have received or are going to receive in exchange for their money. It reminds them of the value you provide and incentivizes them to pay you on time.
Depending on the nature of the goods or services in question, the manner in which the list is laid out will either make or break the invoice. You want to help your clients find the facts as quickly and efficiently as possible. Breaking down the costs clearly will help them get there.
From a practical standpoint, a breakdown of costs can also be useful to the client for their own inventory or stock-taking purposes. Many businesses use invoices as a tracking document for purchased stock, so getting the exact amounts and costs right is essential for client satisfaction.
When compiling the perfect invoice for your clients, adding the taxable amounts and tax details is crucial. Businesses need tax information to ensure their own legal affairs are compliant, and it further legitimizes the legality of your document as a whole.
On your invoices, remember to specify whether the stipulated amount includes or excludes tax or VAT percentages. Clients will use that information in their financial records and gain a deeper understanding of the transaction that is occurring between your two companies.
If your invoice omits the all-important payment information, any payment hiccups that occur cannot be blamed on anyone but the sender. Your invoices should not only include up-to-date payment details relevant to your company, but they should also include a complete list of different payment methods you accept.
Adding the payment terms preferable to your business displays further professionalism. Invoices should detail any information regarding percentage-based deposits or discounts that may apply.
Providing additional payment options is another way to make your invoice even more efficient. It also increases the likelihood of quick settlement. Businesses now commonly accept many forms of payment beyond basic bank transfers, embracing methods such as Bitcoin, PayPal, Apple Pay, QR codes and more. Why not move forward with the rest of them?
Penalties And Late Fees
Setting boundaries to the time frame of your fee system promotes much faster payments. There’s nothing like a deadline to kick people into action, and adding a minor penalty for late payments can incentivize clients to pay you exactly when you need them to.
For example, you could set a terms and conditions clause that states that any payments made later than a stipulated date will incur an increase of 10%. The longer a client goes without paying you, the more they will owe. Of course, the time frame and penalty must be reasonable, but it can come in really handy for tardy or unprofessional clients.
On the other side of that spectrum, you can further encourage timely payments by offering discounts to clients who pay early. Give people the direction they need to pay you on your own terms.
In the age of digital billing systems, well-designed invoices are becoming the norm. Creating a unique yet professional-looking invoice design can boost your brand image and even make clients take your business more seriously.
Simply listing the facts in default Word document fonts will no longer cut the chase. Your logo, layout, and color scheme should all be carefully thought out to ensure that there is as much visual balance as possible. You can enlist the help of a designer, or you can use a free invoice template to ensure you tick all the right design boxes.
A great invoice in 2022 is visually appealing, interesting, and above all, professional. Now that everyone has access to a wide variety of design platforms, no business has an excuse for using a plain, dull invoice.
Invoices are an inescapable component of running any business. But one small mistake can cause payment issues, so you’ve got to get the formula right.
With a clear breakdown, accurate information, clever design, and clearly defined payment guidelines, your clients will have no trouble paying you on time.
So, consider reassessing the way your business’s invoices are created, and use these tips to improve them for a faster, safer, and more effective billing system.
Kristie Wright is an experienced freelance writer who covers topics on logistics, finance and management, mostly catering to small businesses and sole proprietors. When she’s not typing away at her keyboard, Kristie enjoys roasting her own coffee and is an avid tabletop gamer.