By Sandra HolzOn Aug 30, 2019 Invoice Templates
Invoices assist a company in getting paid in full and getting paid on time. It can be difficult to get paid without a proper invoice. Companies commonly demand receipt of a detailed invoice before disbursing payments. Payment terms can help a company collect receivables quickly. For example, a company may say that payment is due upon receipt, within 30 days of receipt or 60 days receipt. Including a late fee policy on an invoice -- for example, that late payments are subject to a $20 fee -- can also help ensure prompt payment. Invoices provide evidence that products and services are delivered and establish a company right to payment. In the event that a customer does not pay, a company can use contracts and invoices to legally demonstrate to a court of law that it is owed payment. Likewise, the company can keep copies of invoices and amounts paid to contractors and vendors to establish that it completed its contractual obligation for payment. Even if you do everything right, there is always a possibility your business could be audited by the IRS. During an audit, the IRS wants to ensure that you have properly reported all income you received during the year. If you have an organized system of sequentially numbered invoices, the IRS has more confidence that you have reported income fully and correctly. If invoices are erratic or nonexistent, the burden of proof is on you to show that you are not hiding any income.
Add a date that shows when you submitted the invoice to the client. The date prepared line is important because you will need to refer to it if a client takes a long time to pay you. We will go into that shortly, under payment terms. Specify when, exactly, the payment is due. The due date is entirely up to you, but most freelancers — and invoicing systems — use a 30-day, 45-day or 60-day timeline. You can also make the invoice Due upon receipt, so the recipient is required to pay the invoice promptly. This should not be the first time your client has heard about the due date. When you agreed to do the work — and hopefully signed a contract, or at least agreed to terms via email — you should have set expectations with the client for payment terms. If the client does not pay on time, you can refer back to this due date, as well as the prepared date if necessary. It is typically helpful to the client if you specify your payment options — whether you prefer to be paid with cash, a check, a credit card or a service like PayPal. (If PayPal is your preferred payment method, it is smart to add your PayPal email address to the invoice, so they send the payment to the right place.) Some companies offer direct deposit if you work for them on a regular basis, but more than likely you will have to send an invoice to request payment every time you complete a project.
Sales invoices help to protect small business owners from fraudulent or petty civil lawsuits. The invoice shows that a particular good or service was provided at a certain time. An invoice with a customers signature proves especially valuable, since they illustrate an agreement between a vendor and customer. Without an invoice, there is no record that the sale occurred, which also opens a business up to conflicts regarding pricing. A company that keeps close track of all sales invoices can utilize the information to target its customer base. For example, businesses can input data such as dates of sales, products sold and the amount for which they sold. Computer programs or marketing firms can then compile the information to see peak buying times, popular products and earning trends. This proves valuable when developing business marketing strategies.
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