Small Business Invoice Terms and Conditions Sample for Customer Service

Small business invoice terms and conditions sample for Customer Service

Hi I'm Ian Varley CEO of Eagle Business Credit. Welcome to The Money Factor. Today we're going to be talking about a subject that every business knows about or should know about, invoicing. All right so I'm joined here today by Angela Reece, my head of operations here at Eagle, and we're going to be talking about some of the issues that people run across that we see with our clients with regard to invoicing. Maybe some common mistakes that they make, but really some top tips on what to do to really have a good invoice so that you get paid. We see this all the time. We deal with clients across a wide range of industries, and Angela and I have got many years of experience looking at different sorts of industries from different sorts of clients to their customers. So again it's our bread and butter on a daily basis. So hopefully some useful tips. Angela tell us a little bit about some of the things you think a client should always have on their invoice. Some of the key things that you need to have are a unique invoice number, invoice date, yep, you want to have who it's billed to, proper name of the company, proper address, if there's an email address of where you're sending the invoice it's nice to have that on there as well. You definitely want to have the invoice terms and a due date is also helpful. Right. What do the invoice terms mean? Net 30 days from date of receipt and net 30 days from date of the invoice. You also want to list out the types of services or product that's being sold to your customer. It's best to have that detailed out and you need to refer back to a purchase order the company has issued to you and in that purchase order there may be specific terms or items that the customers requiring you to detail out in the invoice. So you want  to have that, and then finally, the amount that's due from your customer. Seems easy but often people can forget one or more of those things. You can use QuickBooks or any kind of accounting system nowadays to produce an invoice, a nice looking invoice. So the actual ability to produce it is not an issue. It should be easy, but you've got to make sure that all of those things are in there. And we see many invoices that just say 30 days. Well 30 days from what? Is it receipt of goods? Is a date of order? Is it date of invoice? Seems obvious, and you know you're in a rush to get that invoice issued, you might miss some of the real simple stuff like Angela just mentioned. That ultimately could mean that you have a problem. Your invoice could get rejected by your customer. Say if they have a PO requirement, right? PO's typically will tell the seller exactly what they need to do, right? We see that a lot. Yes so again look at your PO. If you don't have a PO, contact your customer, get the right contact information. You don't want your invoice going to the wrong person. Maybe they've got multiple offices and AP (Accounts Payable) is in one place and you sent it to the place where the goods went. You know again, common stuff. Something else to think about is if you get a purchase order from your customer and it's for a specific amount and you end up billing it for more than that purchase order amount. Don't just raise your invoice to where it doesn't match your purchase order, but you want to make sure you go get the proper change order that may be necessary in order to get that invoice paid. Otherwise your invoice will get kicked back because it doesn't tie out to its purchase order that was issued. Exactly that's a really key point, and we do see that. You know, the number of times an invoice can get rejected and sometimes just not rejected but just not paid. And we all make calls and say hey you've got this invoice in your system and it could be a few days, down the road two weeks after the goods have been delivered, all the services being performed and unbeknownst to everybody, you know information was missing on the invoice. So again some real simple things to remember, and once you get into a pattern of making sure that your invoices have that quality information on them, you'll find whether you factor or not you'll find you get paid better. Yes the last thing we want for any of our clients is to have an invoice that's delayed because of something simple that could have been done when the invoice was issued. All right so you've got it down. You know what to put on an invoice. That's great. What do you do now? You've sold the goods. You've completed the service. When should you send the invoice? Who should you send it to? Tell us some of the stuff that our audience and our clients need to remember in terms of sending their invoices out. As soon as you finish your services or ship your product you should bill a customer immediately. Yeah. Any delays in that it's going to delay your entire payment process, and you want to make sure that when you do send that invoice out you're sending it the proper way. So does the customer require you to mail a physical copy of an invoice, or are you able to send them an email copy of the invoice? Go ahead and take care of that so you can get those payments immediately. So if you're going to invoice your customers for any late fees that may be due on the invoice make sure the late fees are clearly identified on the invoice itself and that's going to be in the terms of conditions right. So if your payment is beyond 30 days late, some sellers will will charge you an extra percentage or one and a half points yes, so that kind of thing but it's got to be in their terms of condition, and you need to make sure... it's a good idea that most people will put that on the bottom of the invoice. yeah yeah the other key thing to have is you want to make sure that your customers know where to send those payments. Do you want payments to come to you electronically, or do you want them to mail you payments? Make sure that information is clearly visible on the invoice to where they should remit those payments. It's a really key point. You know make it easy for your customer to pay you. Don't have them wonder should I send it to this address or what? Usually you can put some information on a box at the bottom it's a field you can pre-populate and have as a standard field. Maybe you'll accept payment by credit card in which case you can give them a website address to go to, or if it's an electronic invoice sometimes those will have you know a hotlink on them so they can click it and pay by card right away or by bank account debit-- either electronic way but again make it easy for them to pay, and you'll find that a lot of companies just want to pay your invoice and don't have to work out where to send it or what to do with it. Right yes and also don't assume that they're gonna pay you by electronic method. Some companies don't choose that method and they want to make sure they have a check that they can mail you. So it's always good to check with the accounts payable Department of a company you're dealing with to ensure that you understand how you're going to get paid. Right and nowadays we're seeing more and more people that don't actually issue a physical invoice anymore and maybe they don't even do an e-mailed invoice maybe they're doing it via portals, is that right? We're seeing quite a few of those come through usually with larger customers and maybe they dictate the terms under which the seller has to use their portal to get paid. So it's really important to understand from your customer how they want to be billed. You know they may be refer back to that PO maybe they've got some details in there but also have your terms and conditions of sale as well so if you've given them 30 days to pay and their terms are something different, understand that. Because you don't want any conflict with them but really importantly like Angela said to get that invoice issued as soon as the sale has been completed with it the goods have been delivered all that services being performed. Don't wait. You're just waiting longer to get paid. All right so we've talked about how to create your invoice, how to send it...Some common mistakes. We see a lot unfortunately, and so we can talk with some experience about some situations that we've seen with our clients, but let's hit maybe some common reoccurring mistakes that we see. Some common things that I've seen our clients run into is they don't follow up with accounts payable to make sure that you've actually received their invoice and everything was billed out properly on that invoice. If you don't reach out especially if it hits day forty and you still haven't reached out and your   payment is late... it's okay to actually call them before it's due, right? It is okay to call them, yeah. It's highly recommended yes. Some companies will have a portal where you can go on and see that your invoice is in there and set up in the payment processing you know and the queue for payment. Other companies you need to call and they don't mind you calling because they want those invoices so they can pay those, and make those payments promptly so it's not sitting on their books, right? You know simple things like not being able, not putting you know the specific details that are required in the invoice body per the PO that you have will cause a payment delay. Right. Not having the invoice amount match the purchase order amount will also cause  payment delay. Exactly and I think that's really key so we talked about how to create an invoice, make sure those details are correct you know you won't get paid if there's something obvious missing, so don't be afraid to make an after sales call and it can be to the person that you worked with, the buyer, but it can also be to you know speak to that person about well who's gonna handle processing of the invoice for me. If you didn't know before you made the sale, now is the time to find out because you want to make sure that invoice goes through their process and their system very smoothly. And again eradicating mistakes is one way to do it. Don't over complicate it for them either, so you know we've seen people put complicated payment process information on their invoices and really they should they should keep it simple I mean you only need the basic details and that will get your invoice paid. Also remember that when you do send your invoices to some companies have different levels where the invoices have to go - yeah and you may have to send it to a project manager first in order to get their approval and they submit the invoice through to accounts payable so in those cases it's very it's very good to call and make sure that that project manager has done his job through the invoice and sent it to accounts payable for payment otherwise it could sit there for a long time until you make that phone call and some of these people are super busy you can imagine they've got stacks of emails and printed invoices maybe they came in with the goods you just want to get to the top of that pile and you want to do it in a way that you know creates good feeling between you and your customer because you want to repeat sales so again don't be put off by just making a call saying everything ok got the invoice wonderful anything you need from me any questions I kind of think it's not a demand or core collection call it's merely just after-sales look at it that way and it's your opportunity or their opportunity to tell you as the seller you've got the PO number wrong or what are the terms again you know whatever they need to know in order to get your invoice into their system so that you can get paid again don't worry about making that call so some examples some instances of invoicing mistakes we see hundreds of invoices a day so we could give you lots of examples but what I'm thinking of is is in the staffing sector we've had a number of clients there and we love staffing clients we can really provide a great cashflow benefit in that sector but specifically we've seen some issues with a couple of clients and their invoicing right can you think what I'm thinking of yes okay so when you bill out your invoicing you want to make sure you're billing for the proper type of services and time of services provided. So you have your time sheets you want to make sure you calculate those hours properly for each day they work and you want to have it clearly billed out on the invoice and easily identifiable to the customer not only that if they have overtime hours that are billed out most customers like to see that as a separate line item because you are charging them a time and a half rate right so you have to be very careful and meticulous when it comes to calculating those hours because unless you have something that is digital or electronic or is automatically calculating the number of hours that were worked right there's a lot of manual process to that If you're not careful you make mistakes your invoices will get rejected and if you don't call and find out why your invoice wasn't paid you're not going to find out its own way late in the process and that's just one sector that we deal with so again if you're in the staffing sector if you've got an electronic system so that it all flows through and your invoice is cut based on that information then wonderful but if not you're going to be relying on the quality of that timesheet was it signed off and making sure that your AP clerk has got that information into your invoice and not just the number of hours but it was it at the right rate so if there's some overtime as Angela was saying it's very easy to make a mistake worst case scenario your invoice gets rejected and now you've got an issue of credit memo or redo the whole invoice for your customer and you know again it just delays things for you to get paid and all of this information and issue can be resolved by a little bit more upfront work and again a meticulous approach to issuing those invoices so again the detail is where you need to focus so invoice factoring we deal with invoices every day it's what we do we advance funds on your accounts receivable so we can really help you improve your process and point out some areas that maybe you need to look at one of the other writing things that we have to consider is the invoices themselves obviously and the customer terms and whether there's a purchase order required we want to understand your business and make sure that those invoices are going to get paid just as much as you do so we see a lot of different examples and thinking some of the clients that we look at when you look at invoice enter and when you look at clients and different industry sectors one of the first things you go to first thing I look at is you know what are the terms show me the purchase order show me the contracts I'll review that and then I compare it to the invoice that's actually raised so when I look at that I'm looking for you know what's the work that was performed or billed for actually included in the purchase or a contract right now what are the pricing you know what's the price or a three different price that your your customer and yourself an agreed upon yeah where are the invoice terms is that clearly identified on your invoice do you reference your contract number or your purchase order number on the invoice you want to make sure all these things are visible otherwise it will create issues on the back end and trying to collect as fact if you're factoring your invoices we will take all that information review it and if we spot any errors we will identify that to you make suggestions on how you can improve your in a way so that you can get your payments faster and if there is an obvious error and we will get you to refill it rewards actually sent out to the customer so that we can get paid faster so you're going to get access to an expert like Angela and a team here at Eagle who are going to review all these things for you and you may have been doing business with a customer for quite some time and maybe they're paying you around 60 days and you can't figure it out why a fresh set of eyes maybe will reveal something that you could do differently that's real simple and even if you choose not to sign up with us we're happy to look through this stuff obviously we want you on board we want to help you provide the financing we'll be beneficial to you again if you choose not to proceed we will have gone through that process and maybe talk to you about the nature of your building how you handle it now and the kind of issues that you run into and having that expert and she really is many years of experience looking at these things just talking to you about how you do it is invaluable and again you can have a takeaway there that will perhaps help you with your customer relationship and grow your business anyway so again we are invoice experts it's what we do and we're here to help you ultimately whether you sign up with us or not we can help you if you sign up we'll provide you with a great smooth cash flow finance facility but in the event you just want to talk to us about your invoicing give us a call also as you know as part of the factoring service we will actually reach out to your customers and change for payment so that's something that you don't have to do on your part we will do that for you that's about the point a lot of times we'll reach out within a couple weeks of raising the invoice just to verify they have everything everything set up for payment so there are no delays we have seen several instances with some of our clients who were experiencing 90-day pay because they simply weren't doing the proper steps that we've identified here today and making sure they get their invoices paid faster and we've been able to turn that 90-day pay into a 30-day pay for us that is a success it is and remember we're not a collections company a lot of people get concerned about that really all we're doing is ledger management receivables management we are going to help you by taking the burden of following up on your invoices off your hands and you can free up a member of stuff that maybe did that previously to do other things to help you grow or if you didn't have somebody doing that previously well now you've got the added benefit of making sure if somebody's here working on your behalf just getting the information from your customers a PS a real soft call to say do you have a voice number one two three in the system is it approved yet when if you go to schedule for payment that's the kind of call we make people get concerned about that but they really don't need to it's all part of the service we have hundreds of customers with thousands of customers that we deal with and they're very familiar with what a factor does and it's again all part of the process to make sure those invoices are going to get paid on time well thank you Angela I think that was hopefully very useful for everybody hope you enjoyed this episode of the money factor again we could go on for hours about invoicing so again give us a call reach out to us online if you've got questions hashtag the money factor eagle business credit calm and we'll see you next time on the money 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