4 Invoicing Best Practices For Small Businesses

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Invoicing plays a fundamental role in the success of any business, simply because it impacts the cash flow. It’s usually the final stage between delivery and payment of a service or good. Unfortunately, many people don’t give this process the attention it deserves, and in the end, they experience delayed payments.

This problem cuts across all small and medium enterprises (SMEs). In fact, statistics suggest that more than three-quarters of all SMEs are impacted by late payments in one way or another. The most surprising part is that some of these delays can extend up to a year, which ends up dragging the growth of these businesses. Of course, some of the cases can be attributed to the client’s poor financial planning or an ethical crisis on their part, so to speak. (1)

However, a good percentage of these late payments are due to poor and ineffective invoicing strategies adapted by small businesses. If you’re facing this issue, and want to get more paid invoices on time, then you might want to try some of the invoicing best practices in this article. Read on and make the necessary changes immediately!

  • Understand your contract needs

A contract plays an important role when it comes to invoicing and payments in any small business. It’s imperative that you understand what’s needed of you prior to signing the deal. Many times, contractors, especially those just starting, can be overexcited and end up missing a crucial part of the agreement. At the end of the project, the payments are always going to be delayed because the client didn’t receive what they expected.

So how do you avoid falling into this problem? It’s important that you be as direct and straightforward as possible. This means covering all the details, from financial requirements to the desired timeframes. Of course, you can record everything on physical copies, but that’ll just make add another step for you.

The best way to go it is to record the estimated expenses and timelines into a database like a plumbing service software. These applications are used by professional plumbing firms, not only to record the aforementioned factors but also the specific technicians assigned to each task. Regardless of your field of specialization, there’s always a management software designed to simplify your work.

Since this system gives you an effective way of estimating the overall expenses, you’ll have an easier time drafting an agreement with every client. Also, the fact that you can track almost every step of the process means you’ll be able to ensure that your employees deliver as expected. At the end of the day, you’ll leave your client with a bright smile on their face, which is something you should always work toward as a business. 

  • Embrace modern technology

In this day and age, you can’t be competitive in any business if you don’t embrace current innovations. Technology helps streamline various processes in a business, invoicing included. Every entrepreneur today is working toward automating all recurring activities in their enterprises, which could ensure little room for error in that these processes follow a logical sequence before completing a task.

So how do you automate your invoicing? There are a lot of software applications in the market with all the features you might need. For instance, you can add reminders to notify you whenever a payment is overdue. In such a case, you’ll be able to alert the client almost immediately, which will go a long way in speeding up the payment process.

Another important feature available on these apps is the “read receipts” option. As the name suggests, this’ll show you when the recipient opens the invoice. It’s more like those notification alerts that pop up after your message is delivered.

The benefit of turning on this feature is the fact that you’ll know if your invoice successfully reached the recipient on time. As such, you’ll know when to expect the payments and when to start sending out reminders in case of any delays. Of course, it’s worth noting that this is only possible when you’re doing everything online.

  • Send invoices on time

One reason why many small businesses are facing difficulties in their cash flow is because of sending their invoices quite late. Remember, even the slightest delays of two to three days can have ripple effects in your business operations.

For one, that’ll mean you’ll be able to pay your workers, suppliers, and service other expenses before you receive full payment from your clients. It might not seem like a big deal at the beginning because you’re sure that the money will still be deposited in your account to replace what you’ve already used. However, that’s a dangerous habit, especially for a company that’s fully operational and receives new orders on an hourly or daily basis.

Having a limited amount of funds in your account could ultimately cripple your business, which means the clients could have their orders delivered past the deadlines. In return, you’ll, again, experience delayed payments. To avoid this problem, you should strive to always send your invoices as soon as the service or good has been delivered. If you’re forgetful, then you might want to utilize various notification options on your management software to ensure that you don’t delay the process. (2)

  • Offer multiple payment options

Depending on only one payment method means you’ll be limiting your clients to this mode. Of course, it can be beneficial because you’ll have all the money in one place, but that can also lead to delays. For example, take a client who doesn’t have a PayPal account yet that’s the only method you’re using or offering.

For them to pay you, they’ll need to create and verify a new account, and that is a lengthy process that could potentially put them off. Therefore, it’d be prudent to have as many payment options as possible. But make sure you can manage all of them to avoid any accounting issues.


You invoicing habits are what determine whether you’ll be able to receive your payments on time. Embracing the current technology like business management software will go a long way in improving your invoicing strategy. Also, be sure to offer multiple payment channels to make it simpler for the client to send you what they owe you. Of course, there’s no specific method that’ll work for every business. But trying all the tips provided in this article will give you better chances of realizing your dreams.


  1. “Late payments – how to minimise the impact on your business”, Source: https://www.theguardian.com/small-business-network/2014/sep/23/late-payments-minimise-impact-business
  2. “8 Tips to Get Someone to Pay Your Invoice On Time”, Source: https://www.forbes.com/sites/johnrampton/2017/05/01/8-tips-to-get-someone-to-pay-your-invoice-on-time/?sh=535418e54289
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Jennifer Evans
President, @B2BNewsnetwork (launched Nov 2014). Content, community and analytics obsessed. Inventor @squeezecmm. Past chair, @itac_online @whiteribbon