When to send an invoice to a customer.
Learn more about the timeline of issuing invoices and whether it’s better to invoice before or after the completion of work.
If your business doesn’t know when to send an invoice to a customer, it can interrupt cash flow and cause you unnecessary stress. Read on to learn more about the timeline of when to send an invoice and whether it’s better for your business to invoice before or after the completion of work.
Why it matters when you send an invoice.
The rhythm of a business’s cash flow is tied to the decision of when to issue an invoice. Billing isn’t just about formalizing a transaction — it plays a pivotal role in ensuring that funds circulate smoothly, allowing businesses to meet their operational demands and growth.
Do I invoice before or after payment?
First, let’s look at the purpose of invoices in your business. You’ll send invoices to notify your customers that payment is owed.
When you decide to send invoices is up to you — whether that’s before you begin work or after completion — but your customers shouldn’t pay you before you send an official invoice.
Options for when to send an invoice.
When you’re considering when you should issue an invoice, there are different options you can choose from. The timing for sending an invoice can and may vary depending on the nature of the project, the relationship you have with the client, and the terms you both agreed upon.
Some options for when to issue an invoice are as follows:
- Issuing the invoice before the work begins
- Issuing the invoice for milestones
- Issuing the invoice after the work is completed
Issue an invoice before work begins.
Invoicing upfront helps your business maintain a healthy cash flow, along with a few other benefits. Because the client has already invested in you and your services, they’re more likely to be involved in the project and provide any guidance or clarification as the project progresses.
By invoicing upfront, you’ll also guarantee that money won’t run out halfway through a project, which could delay or ultimately stop completion. However, invoicing before work begins isn’t always a suitable approach.
You can also consider accepting a deposit instead of the full payment for the goods or services.
Issue an invoice for milestones.
Milestone-invoicing is the practice of billing clients at different predefined stages or milestones throughout the length of a project instead of waiting for the project to be completed. Each milestone represents a specific deliverable or a percentage of the project.
Some of the benefits of issuing an invoice for milestones are improving cash flow, mitigating financial risks, building client trust, and offering flexibility in payment.
Send an invoice after work is complete.
If it fits in better with your business model, it may be more appropriate to invoice after work has been completed. Ideally, once your project is concluded, you’d send the invoice immediately, but you could also choose to invoice at the end of a two-week cycle or the month’s end.
There’s no set legal standard for when to issue invoices, so make sure to agree on terms with your client in advance. This helps to prevent misunderstandings and helps ensure prompt delivery of payment.
Process to follow up after you send an invoice.
Businesses need to remember that it’s crucial to follow up after sending an invoice to help support timely payment and continue professional relationships. You can follow this list of steps in case you need guidance on how to follow up after sending an invoice:
- Confirmation. Once you’ve sent the invoice, always remember to send a confirmation to the client. This confirmation can be an email acknowledging that the invoice was sent and an expected due date.
- Reminder. If the payment date is approaching and you still need to receive the payment, you can send a gentle email reminder a week before the due date. You can also send another reminder on the deadline by calling or leaving a message.
- Follow-up. If a week or more has passed since the due date and you still haven’t received a payment, you can be more assertive in your reminder. When you reach out to the client, you can be assertive and even consider including a statement of the account showing the overdue invoice.
- Final notice. If a month has gone by and you don’t have the payment yet, send a final notice to the client. In this notice, clearly indicate that this is the last reminder before you take further action, such as passing the debt to a collection agency or seeking legal action.
When diving into the topic of when to invoice a customer, it’s essential to also understand how to send invoices efficiently to help ensure timely payments.
Is it illegal to invoice before shipping work?
Invoicing before shipping work is not inherently illegal. The practice of invoices usually depends on the industry, the nature of the transaction, and the local laws and regulations. In fact, there are certain industries where it’s standard practice to invoice before shipping the goods or providing the services.
If you’re looking to send an invoice before shipping your work, here are some considerations you should take into account:
- Transparency. It’s important to be transparent with the customer and ensure that they’re aware of and agree to the invoicing terms before the transaction begins.
- Reliability. If businesses invoice before shipping work, they should be able to deliver the goods or services in the expected time frame.
- Refund policy. If the goods cannot be shipped, the company should have a clear and fair refund policy.
Keep your cash flow moving.
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