Where does it start? Does it start when you make your first sale or when you start your business? There are many things to consider when it comes to invoicing it’s not always just as simple as creating a sales receipt. An invoice is an extension of your business and it’s a document that represents your business. An invoice is also a document that can help you keep track of many things like clients, inventory going out, services completed, revenues coming in, and taxes collected and owed.
There are several things to consider when creating an invoicing process. For starters at what point will you send out an invoice? Will you send out an invoice as soon as you have completed the service or shipped the product or will you have an invoicing date like the last day of the month or at the end of each week? The type of business you are running and the person responsible for invoicing will determine the best time to invoice.
If you have a dedicated invoicing person this person will have a routine that sets a particular time for invoicing. It may be in the best interest for all that once a sale is made the invoice is prepared immediately for the customer regardless of when payment is due. The customer is given the invoice at the time of sale and the process is completed. Perhaps you are an online business that ships an invoice with the goods so invoicing is done in time to be included in the shipping package. Your shipping schedule will help determine the best time to produce the invoice.
Some companies provide goods and service to clients throughout a month and therefore all their invoicing as per the client contract is done the end of each month. A month end process will be created to ensure all invoicing is completed and no clients are missed. Deciding what type of invoicing process your business will have will impact your cash flow. If you do all you invoicing at the end of each month you will not receive payment for your invoices until after your client receives the invoice plus 30 days after the invoice date if you have 30 day terms.
If your invoicing process is to invoice after each sale and a client has 30 purchases per month the invoicing process may be too time consuming and confusing to produce an invoice after each sale and your system is better served to produce a monthly invoice. The trade off for slower incoming cash is a savings in time spent on creating and following up on too many invoices. Finding a balance in your invoicing process will help you to better service your customers and keep you organized allowing you to focus on your business.