Every business needs proper accounting processes to ensure that you have effective invoices sent to customers or clients on time. These statements should reflect pertinent payment terms that inform the recipients of what they need to know and compel them to make the necessary payments. After all, this is the purpose of an invoice––a statement that asks for payments.
If you run an e-commerce business, drafting your own invoice can be tricky. There are a few important aspects your e-commerce accountant shouldn’t miss out on. In this article, we will share with you four tips to consider for an effective invoice for your e-commerce business:
1. Indicate the due date and payment methods accepted
An invoice generally indicates the products or services provided and the amount of the total bill. However, one of the most vital information that shouldn’t be neglected is the due date of the payment. The due date gives customers or clients a deadline with a timeline to follow, whether it is 14 days, 30 days, 60 days, or 80 days.
You will also have to list the payment options you allow. The goal of an effective invoicing is to make it easy for your customers to pay. So, the more payment options you offer, the better it is for them. Make sure to indicate if you accept credit cards, cheque, and PayPal, among others.
2. Set rules for late payments in place
Apart from the payment due date and method, your e-commerce accountant should set late payment rules as well. While late payments give considerations to clients or customers, the goal is to encourage them to pay on time. That’s why you penalize delinquent customers, whether through a flat fee or by percentage.
Typically, businesses allow a grace period of 15 days before customers will be charged with a late fee. Be sure to include the fee in the contract and discuss this with your customers or clients beforehand about these rules.
3. Keep the invoice recipients in mind
When drafting your invoice, always keep your customers or clients in mind. The simpler and clearer the invoice is, the better and easier it will be for them to understand your expectations. After all, your goal is to make sure that your customers will pay on time.
Another consideration is how you would get these invoices sent to your customers, whether via email or by mail. As much as possible, make sure that the invoices will reach the customers on time so that they can make the payment promptly as well.
4. Utilize technology and automate invoice
Today, it’s a wise move to make use of technology to aid your business processes, and this also applies to the world of an e-commerce business. As far as invoicing is concerned, it’s best to have this automated as well. This helps to make sure that invoices are sent out automatically so that customers have the option to set up a recurring or automatic payment.
Overall, an invoice isn’t just a black-and-white statement that’s asking for a payment from a client or customer. As discussed above, an effective invoice clearly indicates the payment due dates and options, gives considerations through late payments, keeps the recipients in mind, and uses technology for seamless automation.
We provide e-commerce accounting services to help online entrepreneurs reduce tax and increase profit. If you need an e-commerce accountant in Australia, get in touch with us today to see how we can help.