How Do You Do Billing and Invoicing: Tips for Small Businesses
You hear business people throwing around the terms “billing” and “invoicing” as if they were the same thing, so it’s not unusual for them to be used interchangeably. While it’s true that these two business terms have their similarities, some things set them apart.
Today we’ll touch on the main differences between a bill and an invoice for you to know exactly how each is done. We’ll also sift through some super-important lessons in billing and invoicing that could help you run your business better.
The Main Differences Between Invoicing and Billing
The most significant difference between an invoice and a bill lies in the information contained in these documents. In an invoice, there is usually a set template with the following items:
- The word “invoice”
- A unique invoice number
- Date of issuance
- Invoice due date
- Business name, address, and contact details
- Customer’s contact details
- Product or service details
- The total amount charged to the customer
Information concerning sales tax and other industry-related deductions might also apply.
Conversely, while bills also contain price and tax details, they don’t typically include customer information. That’s unless you count a restaurant bill, which is bound to contain the customer’s table number.
Likewise, while invoices must always show an invoice number for tax, accounting, and financial report purposes, most bills don’t have any kind of numbering. Also, on the off chance that the bills do have numbers, it’s usually for the company’s managerial records.
Another key area showcasing the difference between a bill and an invoice is the type of transaction you use them for. While you hand the bills to customers who pay and receive their product or service in one go, you issue invoices for sales on credit.
How to Do Billing and Invoicing Efficiently
Knowing the differences between billing and invoicing is one thing, but doing both in a way that benefits your company is another. Keep the following lessons in mind to avoid going through the mental and emotional stress of getting your finances wrong.
Set the Specific Terms
You should set the payment terms of your invoice in a way that suits you. Sure, you can wait until the 15th of the following month or 30 days later for payment. However, if you want a shorter payment term, that’s perfectly okay too.
If the payment term is seven days, customers have to do their best to pay within that period. Thus, make sure the terms are crystal clear to your clients before you send them the invoice. You also have to clarify expectations surrounding the due date, payment methods, and late payment consequences.
You can also specify how your customer or client should make the payments for a project. It’s perfectly within your right to ask for a down payment or split payments throughout the service or project. This is particularly beneficial for high-value projects since it ensures that clients will hold up to their end of the bargain.
Chase an Overdue Invoice
Communication is important, not just for your benefit, but your customer’s as well. If an invoice is due and doesn’t look like the client will pay anytime soon, contact them. In most cases, unpaid invoices are not the result of a customer purposely trying to rip you off. The client could have forgotten to make his or her payment on time, didn’t receive the invoice, or lost the invoice.
Get rid of that awkward feeling that surrounds asking for money. In reality, it’s usually your customers who end up feeling awkward for the reasons they weren’t able to pay.
Give Your Services the Value They Deserve
Never short-charge your business. After considering fairly everything that goes into a product or service, don’t feel bad about how you end up pricing it. Don’t think that you’re overpricing because elements like time also have to be valued. When you write the amount to be charged on an invoice, it’s important to feel confident doing so.
Enlist the Help of a Billing and Invoicing Software
Here’s technology saving the day again with high-quality software like Billy invoicing software. You can bill and invoice accurately with just a few clicks, thanks to this and other similar applications. These programs also let you reconcile accounts or determine overdue invoices.
Some applications even go the extra mile by producing invoices using a smoother system, creating quotes, and tracking costs and time.
It Comes Down to the Software
These days, it doesn’t matter if you need to issue a bill or an invoice; a good application or software can do all the hard work for you. There will come a point in running a business when growth and expansion will demand most of your focus. When this time comes, grab a type of software that meets your needs so your attention won’t be too divided.