Have you ever sent an invoice and waited weeks for a payment? Are you wondering what went wrong? An invoice is not just about listing the services you provide and the amount. 

You need to communicate the whole thing properly so you can get paid on time. 

That is why invoice best practices are in place to teach you exactly what you should be doing. 

According to Bottomline, 92% of businesses don’t pay their suppliers on time due to a poor invoicing process.

This shows us how important it is to have a well-structured invoice, so the clients can understand them and pay on time.

If you’ve faced such issues in the last few months, this guide is for you.

Basics of Invoicing

Invoicing is an essential component for any business looking to get paid on time. Contrary to what many might think, billing and invoicing is not just about sending a bill to your client, it’s about maintaining transparency and professionalism throughout the process.

A good invoicing procedure is important so that all the details of your services are clearly communicated to the client. This reduces the chance of misunderstandings, and you get your payment timely.

By using invoicing best practices, businesses can keep a steady cash flow and build strong client relationships. 

Types of Invoices

The invoices are usually divided into different categories according to business needs. You should know which types of products are available to use and which ones fit your brand image. Some common types include:

• Standard Invoice: The most common type used to bill for services or products.

• Proforma Invoice: An estimated invoice sent before the actual work begins.

• Recurring Invoice: Used for regular services like subscriptions or retainers.

• Credit Invoice: Issued when a refund or discount is needed.

• Debit Invoice: Sent to notify of an outstanding debt.

• Mixed Invoice: Combines charges and credits for more complex transactions.

Choosing the right type of invoice is part of understanding your invoicing process best practices. It also makes the client invoices clear and effective. 

Importance of Invoicing

Proper invoicing helps maintain a healthy cash flow for your business. 

In 2023, Quickbooks reported that 61% of small-scale businesses face cash flow issues due to late or pending invoices. 

This shows the importance invoices have for any business, especially for small ones. 

You can handle this challenge by using Client Management Software. By using this software, you can simplify task management and also assist in creating invoices, tracking payments, and managing clients. 

Public reactions to late payment 

Source: Xero

These delayed payments mostly occur due to poor invoicing practices, such as not providing clear details of services or sending a gentle reminder on time. 

However, by using invoice best practices, businesses can reduce payment delays, avoid cash flow problems, and maintain a professional image.

What Needs to Be Included on an Invoice?

When you’re creating invoices for services, you need to include all the necessary details to avoid any confusion. Here’s what needs to be on an invoice before sending it: 

• Business and Client Information: Clearly list your business name, address, and contact information, as well as the client’s details.

• Invoice Number and Date: A unique invoice number and the date of issuance are essential for tracking.

• Description of Goods or Services: Provide a detailed list of what the invoice covers.

• Quantity and Price: Include the quantity of items or hours worked and the corresponding rate.

• Total Due Amount: The sum that is due after any discounts.

• Payment Terms and Due Date: Specify when the payment is due and the terms, such as penalties for late payments.

• Payment Methods: Clearly list all acceptable payment methods to avoid confusion.

All these things also play a significant role in appropriately implementing invoice best practices. By including these details, your invoices will become much more clear, and you’ll experience smooth financial transactions. 

Before you dig deep into this invoicing scenario, here are the top 10 things you should include in your clients’ contracts. 

Percentage of B2B invoices settled late in UAE

Source: Zawya

15 Invoice Best Practices for Smooth Transactions 

Now, we’re at the most crucial part of our guide, which is the fifteen invoice best practices that you must follow while invoicing clients. Let’s see what these are.

Keep Your Invoicing Process Simple

Keep your invoices simple and straightforward. Try not to use unnecessary jargon and make sure that all the important details are easy to find. 

This simplicity makes it easier for clients to understand and act on. 

It also speeds up the payment process, which is the main objective of using invoice best practices. 

Personalize with Branding Elements

Your invoices should have your company's branding. This includes your logo, brand colors, and a consistent font style. It's a key aspect of invoice best practices. 

But why do businesses need to do this? 

Personalizing invoices with your branding reinforces your brand identity. It also shows your professionalism and attention to detail. 

Result of using branding elements on invoices

Source: enty

Highlight Key Details Like Dates and References

It’s crucial to have an effective invoices management solution for maintaining accurate records and timely payments. To do this, clearly display important information such as the invoice date, due date, and reference numbers. 

This makes it easier for both your business and your clients to track and organize invoices. It also reduces the risk of missed payments. 

Percentage of late payments due to incorrect invoices

Source: Forbes

Address, Both the Company and the Contact Person

The next one on our list of invoice best practices is addressing both the company and the person you're sending it to. 

It’s especially useful when dealing with large organizations. This way, the right person will receive your invoice and process it quickly. 

For instance, if you don’t write the name of the right contact person, your invoice will just be lost between departments. 

Add a Brief Note of Appreciation

Include a short message of gratitude, such as “Thank you for your business.” 

A simple note can help build stronger relationships with clients and encourage them to continue working with you. 

This small addition is a smart way to incorporate the invoice best practices in your billing process.

Clearly Describe the Products or Services

It's essential to be transparent with your clients while sending them an invoice. Your invoice should have a detailed breakdown of the services rendered or products sold. 

A clear description helps clients understand what they are paying for and can prevent disputes. 

This is especially crucial when dealing with invoices for services that might not have a tangible product to show. 

Set Clear Expectations During Client Onboarding

During the onboarding process, you need to convey your invoicing and payment expectations clearly. 

Also, tell them about your invoicing procedure, such as the payment terms and methods. 

This sets the tone for a smooth billing experience right from the start that aligns with top invoice best practices.

Emphasize Payment Terms and Deadlines

Always include the payment terms and deadlines prominently on the invoice. This sets clear expectations for when payment is due and can help avoid late payments.

For example, many businesses follow the “Net 30” standard, which means the payment is due 30 days after the invoice date. 

Including clear terms is a fundamental aspect of invoice best practices. 

Use Email for Invoicing and Track Read Receipts

You should send invoices via email to save time. This way, the invoices can reach your client quickly. 

E-invoicing reduces the overall invoice processing time by 65%. 

Most email systems allow you to request a read receipt, which confirms that the invoice has been received and opened by the client. 

It's a great way to know when to follow up with an email if the payment is being delayed, making it an essential step in invoice best practices.  

Send Polite Payment Reminders

You can set up a schedule to send friendly reminders before the payment due date. 

These reminders can help keep your invoices on top of your client’s mind and reduce the chances of late payments without appearing too pushy.

Express Gratitude After Payment

Once a payment is received, send a “Thank You” note to acknowledge the payment and show appreciation. 

This simple gesture can help maintain a positive relationship with your clients. It is a courteous practice and is included in effective invoice best practices. 

It only takes a couple of seconds to send a simple “Thank You.”

Organize and Centralize Your Invoices

Keep all your invoices in one place. You can keep them online or physically in a log book. 

You can also use any accounting software to manage your invoices in a better way. 

By doing so, you can easily track outstanding payments and prepare for audits or financial reviews. It’s an essential component of good invoice best practices.

Choose the Right Fee Structure for Your Business

You should select a fee structure that aligns with your business model and client expectations. 

You can go for a flat fee, hourly rate, or percentage-based fee structure. 

The right structure is important for maintaining transparency and trust between the two parties. 

Research different types of fee structures and compare them to your business to see which one is perfect for you. 

Check out our “Client Outreach Strategy” to get more qualified leads than ever.

Offer Multiple Payment Methods

Make it easy for clients to pay by offering a variety of payment options, such as bank transfers, credit cards, and digital payment systems like PayPal. 

The easier it is for clients to pay, the quicker you’ll receive your money. 

Most popular payment methods in the U.S. 2024

Source: Upgraded Points

Offering multiple payment options is considered the best way to invoice clients effectively.

Automate Recurring Invoicing Tasks

The last one on our list of invoice best practices is automating recurring tasks. 

You can use invoicing software such as ClientManager to automate repeat billing processes. This will save much of your important time and reduce the chances of error. 

Automation is particularly useful for businesses that invoice the same clients regularly.

Percentage of organizations using automation for accounts payable

Source: Business Solutions Inc.

Four Most Common Invoicing Mistakes to Avoid

By all means, you must avoid these common invoicing mistakes that can delay payments and damage client relationships. 

1. Sending Invoices Late: Delays in sending invoices can result in delayed payments. So make sure to forward your invoices as soon as the work is done.

2. Incorrect Information: Errors in the invoice details can confuse clients and lead to disputes. Try to write everything clearly for your clients.

3. Not specifying payment terms and methods: When you send an invoice to the client, it should have payment terms clearly written and even the method through which they can pay you. Try to provide a couple of ways to make it easy for them.

4. Lack of Follow-Up: Not following up on unpaid invoices can result in missed payments. You should send a polite reminder to your clients if they have missed a due date.

Avoiding these mistakes is also important for following invoice best practices.

How to Invoice a Client?

If you want to know how to invoice a client effectively, read the points below. 

We’ve added the best ways to invoice your clients and get paid. 

You can also use our Proposal Builder to send your clients a proposal before sending a complete invoice.

Average invoice costs in the US, UK, and AUS

Source: DocuClipper

The Best Way to Invoice Clients to Facilitate On-Time Payments

Let’s take a look at the best way to invoice clients to ensure a consistent cash flow. 

Offer Early Payment Discounts

You can encourage your clients to pay invoices on time by offering a discount. 

For example, offer a 5% discount if they pay within five days and a 2% discount if they pay within ten days. 

This way, your clients will settle the invoices as quickly as possible.

Personalize Invoices

You should personalize the invoice for your clients. Use their past payment behavior to do so. 

If a client often pays late, send detailed invoices with clear payment reminders. 

Meanwhile, for clients who always pay on time, keep the invoice simple.

Create a Client Portal

The next thing you can do is set up an online portal for your clients where they can view, download, and pay their invoices all in one place. 

We also provide Client Portal Software, which you can use to automate your invoices. 

By using this software, you can also automate your follow up process and send email reminders if the invoices aren't paid on time. 

This keeps clients informed and helps you stay on top of overdue payments.

Offer Payment Plans for Big Invoices

For larger bills, give clients the option to pay in smaller chunks over time. This flexibility can make it easier for clients to pay and help you avoid payment delays. 

It also helps keep a consistent cash flow, which you can use to fulfill more orders.

How to Organize Invoices?

Sending invoices isn’t enough; you also need to know how to organize invoices. Here’s what you need to do:

• Use a Digital System: Keep all your invoices in one place by using software. This makes it easy to find and manage your invoices.

• Categorize Invoices: Sort your invoices into groups based on their status, such as paid, unpaid, or overdue. Through this you can track which invoices need attention.

• Regularly Check Your Invoices: Make sure to regularly check your invoices against the payments you’ve received. By regularly checking your invoices, you can spot any errors, and you can stay stress-free by seeing that everything is accurate.

• Back-Up Your Invoices: Always keep a backup of your invoices. You can keep it as a digital copy on the cloud or even a physical copy if you prefer that. This way, you’ll have a complete record even if anything gets lost or your system fails.

How to Handle Overdue Invoices?

When an invoice becomes overdue, it's important to act quickly but professionally to remind your customer or business partner of their outstanding payment. 

The first step is to send a polite email reminder. In many cases, a simple reminder is enough, as clients may have forgotten to make the payment. 

Upon receiving your email, they will likely settle the invoice immediately.

However, there are situations where clients may be unable to pay due to cash flow issues, or they might be unwilling to settle the invoice. 

In such cases, a reminder might not lead to immediate payment.

If the initial reminder does not result in payment, the next step is to consider more formal actions. 

For instance, you can hire a payment collection agency or consult a lawyer to take legal action to recover the outstanding amount.

Example of an Overdue Invoice Reminder Template

Follow-up email template #1

If this doesn’t work, you can go for a more urgent email and use a firmer tone. Just remember, even when being a little firm, never become unprofessional, as it can cause more issues. 

You can use this template to send them another follow-up email.

Follow-up email template #2

Streamline Your Invoicing with ClientManager

Are you tired of chasing down payments and managing client details manually? You don’t have to do it anymore. 

At ClientManger, we provide an all-in-one platform to simplify your invoicing and client management. 

You can use our software to generate professional invoices, manage client onboarding, and maintain a client portal for smooth communication. 

We also incorporate invoice best practices to ensure your billing process is efficient and effective.

Stay organized and get paid faster than ever with ClientManager. 

Still not convinced? Try ClientManager for Free Today!

FAQs: Invoice Best Practices

What is the best practice for paying invoices?

The best practices for paying invoices include agreeing on clear, short payment terms and sending invoices promptly. 

Use e-invoicing with a read receipt and ensure invoices are accurate and easy to understand. 

Include bank details, send invoices to the correct person, and follow up on overdue payments quickly.

What are the legal requirements for invoices?

An invoice is a legally binding document that confirms both parties agree to the quoted price and payment terms. 

To be legally valid, an invoice must include your business and client details, a unique invoice number, a breakdown of services or products, and applicable taxes.

What is the best format for an invoice?

Your invoice should be clear and concise. 

It should include all necessary details, including business details, invoice number and date, and description of goods or services. 

After that, you write what the client owes you and how you would like to get paid, whether online or in cash.

What are the three main steps involved in invoice processing?

The three main steps for processing an invoice include:

1. Creating the Invoice: Clearly outline the services or products provided, including all necessary information.

2. Sending it to the Client: Send it to the client promptly with clear payment instructions so they can pay on time.

3. Following Up on Payments: Remind clients of due dates and address any payment issues.

How do you invoice professionally?

To invoice professionally, include a unique invoice number, your business and customer's information, the issue and delivery dates, and a logo or signature. 

List all services or products provided with their prices, show the total amount due, and add any necessary fine print or terms at the bottom.

What are five ways to pay an invoice?

The five ways by which you can pay an invoice include: 

• Debit or Credit Cards: Quick and convenient, encouraging faster payments.

• Bank Transfer: Directly transfer funds from their bank account.

• Online Payment Services: Pay through services like PayPal or Stripe.

• Digital Wallets: Offer flexibility for online transactions.

• Checks: Send a physical check via mail.