Sales are the foundation of any business. Entrepreneurs track these transactions to monitor their income and expenses, depending on a solid record-keeping system to manage cash flow and ensure regulatory compliance. Most often, business owners prefer getting help from a bookkeeper for small business.
One key aspect of tracking sales is invoicing customers, which serves to bill them for products or services sold. Invoices detail the transaction and serve as a reminder for customers to make payments. As such, invoicing is vital to bookkeeping because it directly impacts the business’s cash inflow.
In addition, invoicing is essential for accurate tax calculations and generating reliable financial reports. It also plays a role in maintaining proper inventory levels by tracking both sales and stock movement. Invoices help keep financial records organised and reduce the risk of errors.
Moreover, they serve as legal proof of a sale if disputes arise with a client. Below, we’ll explore how businesses generate and manage invoices, offering valuable tips to help new entrepreneurs stay organised and compliant.
Steps to Create and Manage Business Invoices
Here are the steps given to create and manage business invoices:
Choose the right invoicing tools
Small business owners who have just started their business or have an established business must get help from a professional bookkeeper for invoicing. It simplifies accounting and helps them maintain accurate financial records. However, if you plan to create invoices yourself, you must have enough knowledge to create invoices without any errors. Many bookkeepers prefer using software like QuickBooks, FreshBooks, and more to streamline the invoice generation process.
Collect invoicing information
The invoice must contain complete and accurate information to ensure the integrity of the business and maintain proper financial records. The invoice data includes details of the seller, such as the name of a business, logo, address, and contact details. It must also have the client’s details, including the client’s name, address, and contact details. The invoice needs to be numbered and clearly mention the date and time of the payment. It must describe the purchased product, its quantity, price per item, and the total order value, discounts, and taxes. The invoice must also have the terms of payment that both parties need to agree upon before the financial transaction. Plus, it must have account information for payment.
Generate and send an invoice
The invoice layout must be professional and can be prepared by getting help from a professional bookkeeper or the best accountant in Melbourne. The information must be shown clearly in a readable font, and the payment terms need to be mentioned in bold letters. The brand voice needs to be maintained in the invoice to ensure consistency and maintain good relations with clients. It shouldn’t be too long to make the client skip through essential details. Plus, the invoice must end with a thank you note to express gratitude and make the clients pay on time. Businesses looking to improve cash flow can provide early payment discounts to maximise incoming revenue. The invoice should be saved in PDF format and emailed to the customer.
Send reminders to clients about overdue payments
It’s essential to send reminders to clients to get payments on time. Every bookkeeper uses automation tools to send reminders to save time. Generally, bookkeepers send the first reminder ten days before the due date, and the second reminder is sent 2 days before the due date.
Assess cash flow
Bookkeepers always work to enhance the cash flow. It includes keeping the incomings higher than the outgoings of cash. Since the cash inflow is based on invoicing, they need to act quickly to get the payments. These professionals create cash flow estimations and monitor inflows to maintain a positive cash flow. They create a bank reconciliation statement frequently to avoid mistakes and stay updated.
Conclusion
Creating and dealing with invoices is easy when you have a professional bookkeeper by your side. When your business starts growing, you may have to deal with a number of payments. To reduce the stress of managing and creating invoices, you can get reliable bookkeeping services.