Posted in Finance, Accounting and Economics Terms, Total Reads: 243
Definition: Customer Invoicing/Accounting
Invoicing is the process to itemize the transactions with the customer. An invoice is a commercial document, issued by the seller to the buyer. It contains list of items with their price and quantity, date, unique invoice number and tax details.
The requirements of a good customer invoicing are:
• Effective and efficient processing to request and accept the payments from customer
• Good invoice format
• Multiple user access
• Backup and interruption plans to tackle the service outages
• Flexible reporting
• Good email invoice system
For micro, small and medium enterprises, invoicing becomes far more important as they don’t want their money to be stuck for long. A customer usually doesn’t pay until you ask for it, so invoicing becomes vital.
Following steps should be kept in mind to make the invoicing better:
• Include all the information in the invoice like company name, unique invoice number etc.
• Clearly display the word “Invoice” on the document
• Statements should be readable and clear
• The free space on the document should be properly utilized, say for the advertisements of the company
• Retain the invoice documents properly and always know your obligations
• Send the receipt digitally or physically or by both means, depending upon the choice of the customer
• Send an extra envelope to the customer in which they can return the payment
• Before sending the invoice, call the customers to cross-check whether the price written is right or not
• Know the industry norms, like what is the average cycle of payments for example 30 days or 45 days
• Number the invoices sequentially, develop a good numbering system for that
• Always keep a backup vendor
• Choose a good software system from a reliable vendor
• Never jump directly to legal battle in case of defaults. Negotiations can save you a lot of money and help to retain good customer relationship as well
• Always know your customer well, get as much information as you can
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