14 years ago when we founded Isolta, we faced more challenges than expected. Learning step by step we’d love to share important tips and our little secrets in our “From founder to founder” series.
For young entrepreneurs doing invoices is important but takes an immense amount of time, though. While establishing a company, entrepreneurs should first work on certain things, like what are the legal guidelines for invoices and orders? Are some contracts considered to be eligible with the good old handshake? And how important are the general terms and conditions?
We have compiled a small checklist for a few questions about invoices. So you would not forget any of the important ingredients, and the soup will not boil over. Especially in the case when a customer can not pay, or would like to pay.
Main ingredients of an invoice
An invoice is a legally binding document which counts provider services and goods, also ot provides for a monetary balance.
Your invoice should contain the address of the customer as well as your own, also the range of services and the associated price. It’s important, because the customer wants to know your work’s value in detail.
With these four ingredients you have a stable framework. What is still missing are the special ingredients. So your invoice will become binding.
Specify the date on which you issue your invoice. This way your correspondence with the customer becomes more transparent. If your customer does not want to pay (for whatever reason), you can always refer to the invoice of day X in your correspondence! This way you avoid misunderstandings and give the customer no chance to get away with not paying.
Set a deadline. Whether you set a due date within a week, a month, or within 14 days, if you set a deadline, you are entitled to demand your fee. The customers has to stick to it. If they don't, you are entitled to demand interest.
Specify your bank account. Sure, you have your bank details on the footer and also on your website. The customer should definitely have access to it. Do not make it difficult to find them. Anyone who finds the bank data with one click will pay on time. Important: Do not forget to specify IBAN and BIC. Especially if you trade with customers inside EU. The safe way is to specify all bank related info.
The key is in the details
Invoices are particularly carefully read, like all documents which has to be paid. Check the details! Is your logo always in the same corner? Have you written the customer's name correctly? Do you always use same design, so customers recognize your invoice?
The invoice should look neat and clean, and not only for the customer. The auditor and also the tax administration are looking very closely at whether your invoice number is created chronologically. Under no circumstances may you skip or use the same number multiple times!
Writing invoices: Who has time for it?
Whether you are a PR advisor, graphic designer, craftsman, real estate broker or a tax consultant. Writing invoices is difficult at the beginning of each career and it takes a lot of time.
Many self-employed people do not have the financial resources to hire someone to do this for them. Isolta offers a clever and elegant solution with many advantages.
(Wo)Men of honor: How to handle a customer, who’s not paying
One of our last posts dealt with trust and customer relations. A trusting customer relationship is the cornerstone for a fruitful collaboration. However, this trust can be shaken if your customer takes too much time to pay for invoices. How much time is too much time? You can only decide according to your personal frustration tolerance.
When you are working with B2B, remember that your customer can be also waiting for payments. Therefore, be sure to write the first payment reminder in a friendly manner, with words like "Sure something has came in between", or also: "We understand, from time to time, the workplace is stressful and some things get forgotten". If you have a new payment deadline, please note to the customer that the previous invoice has been changed and the deadline is different.
Second reminder. Not like that!?
Many self-employed entrepreneurs complain about second reminders: Even after the first friendly payment request, customers are reluctant or too lazy to pay. Write in to the subject line that it is already a Second reminder and calculate interest or mention further legal steps.
However, mentioning the legal steps can lower the trust of your customer. But please consider whether you want to co-operate with unreliable customers.