Most invoices contain nearly all of the information a customer needs to make a payment, but the layout may be so poor that they must hunt for the information. In other cases, adding information will reduce payment problems. This post describes a number of invoice layout changes that can help improve collections.
State Contact Information On The Invoice
When a customer receives an invoice and has a question about it, whom does he call? The invoice usually includes only the company’s mailing address, and may show only a post office box where the corporate lockbox is located.
The solution is; to clearly state contact information on the invoice. This should be delineated by a box and possibly noted in bold or colored print. If the billing staff is large, it may not be practical to put a specific contact name on the invoice, but at least list a central contact phone number. If a company has chosen to assign specific customers to individuals in the collections department, it may be possible to list the name of the assigned collections person in the computer file of the customers for whom they are responsible, so the names of assigned people appear on invoices.
List Credit Card Contact Number On The Invoice
Some customers prefer to pay for invoices with a credit card, rather than a check. If so, they call the general number for the company, ask to be routed to the accounting department, and leave credit card information with the first ‘‘live’’ person they contact. This person is frequently not trained in the types of credit card information to collect (writing down the name on the credit card, card number, expiration date, billing address, and need for a receipt can be overwhelming for some), so inadequate information is eventually forwarded to the person trained in processing credit card payments. This person must call back the customer (who may not have left a return phone number!) to obtain the required information.
A better approach is; to list the credit card contact number on the invoice. A refinement of the concept is to list on the invoice the types of credit cards accepted by the company, which may prevent customers from making unnecessary calls if they do not have the right types of cards.
Clearly State The Invoice Payment Date On The Invoice
The standard invoice presentation shows the invoice date in one of the upper corners, and the payment terms (such as ‘‘Net 30’’) somewhere in the header bar, just above the detailed billing information. For the customer to calculate the proper payment date, she must locate the invoice date, add to it the payment terms, and enter this payment date in her computer system. The reality is more complex. The typical accounting computer system automatically defaults the invoice date to the current date (invariably later than the invoice date), and adds to it a default payment-terms date that is stored in the customer file. Thus, there are two ways for a customer to delay payment:
- be lazy and accept the current date as the invoice date
- always use the preset payment terms
The result is chronically late payments.
The solution is; to take the payment date calculation chore away from the customer and clearly state the invoice payment date on the invoice, preferably in bold and located in a box. To make matters as simple as possible, it may make sense to even eliminate all mention of payment terms, so the customer does not try to second guess the company on the proper payment date.
Strip Out Unnecessary Information Or Clarify The Labeling Of Needed Items
If there is too much clutter on an invoice, customers will have a difficult time locating key information. For example, some information used by the accounting staff but not by the customer is included in the header bar, such as the initials of the customer’s salesperson (usually for commission calculation purposes) and the job number. At a particularly high level of obscurity, some accounting systems label the invoice number as something else, such as the ‘‘document number.’’ The end result is more time spent by the customer wading through an invoice to find the relevant information, and a greater risk that the wrong or incorrect information will be transferred from the invoice to the customer’s accounts payable system.
The solution is; to strip out unnecessary information or clarify the labeling of needed items. All but the most primitive accounting computer systems contain report writers that should allow one to make these changes to the invoice template.
Use Courier’s Receipt Signature To Proof Deliveries
There may be cases where customers demand proof of their receipt of a delivery from the company before they will pay its invoice.
One way to provide this information is; to use courier’s (FedEx, UPS, DHL, TNT, etc) receipt signature proof deliveries, since both organizations post receipt signatures on their web sites. One can then copy the signature images out of the web sites and paste them directly into an invoice, thereby providing proof of receipt to the customer on the invoice. If necessary, the billing staff can also add the delivery reference number used by either United Parcel Service or FedEx to the invoice. Either the customer or the company can then go straight to the web site of either package delivery company to obtain further evidence of the time and place of delivery of the package in question. This approach has the distinct advantage of consolidating both the billing and receiving information for a delivery on one piece of paper. The downside is that the invoice cannot be issued until the delivery has been received by the customer, rather than being sent when the package leaves the company’s premises.