Six questions that stop your invoice getting paid

Knowing what to include on your invoice can spell the difference between getting paid and not getting paid quickly -- or at all, but getting a whole bunch of awkward questions instead, writes Emily Coltman, chief accountant at cloud accountancy specialist FreeAgent.

Let’s be clear; your invoice isn’t just a legal document that you have to retain for your records, and it’s not merely a document that asks your client to cough up. The real job of your invoice is to help you get over the final hurdle of a project in getting you what you’re owed.

Under interrogation from a client, agent or HR officer, a poorly designed invoice can break, obstructing your progress and even being held against you as a reason not to pay. For your invoice to stay strong it will need to anticipate any last-minute questions they could fire at you, which could act as barriers to you getting paid. And there’s six of those questions that your invoice should head off:

“Who is this payment demand from?”

Fundamentally, it’s pretty important to make sure that your invoice recipient knows who the invoice is coming from. This might sound obvious, but if your client, HR rep or agent sees dozens of invoices a week, you can't expect them to take the time to figure out who this latest one is from – you! Adding your contact details is the bare minimum you can do to remedy this, but it’s an even better idea to spend time on the design of your invoice template. It’s just as important for your invoice to reflect your brand as it is for your business card or website.

"What work could this possibly be for?”

It’s easy to assume that your client will know exactly what you’re invoicing them for, but they will probably have at least a handful of other projects going on at the same time! Even for a straightforward project, it’s always a good idea to remove any conceivable doubt about what you’re asking your client to pay money for. It’s handy to include any Purchase Order numbers, project reference numbers, or even just the project name like “Intranet System & Site Redesign” on the invoice.

"Did it really cost us THAT much?”

If you quoted for a piece of work a few weeks or even months ago, the figure at the bottom of your invoice might not be quite what your client had optimistically hoped for. And let’s be frank, even if your client knew exactly how much they were being charged, it’s never nice to see a figure that you now have to pay. This is a good opportunity to remind your client about the hard work that you’ve done and exactly what you delivered, using their own language. For example, instead of writing out “prototyping” for a line item on the invoice, you could write, “Three remote work sessions to develop customer-facing website prototypes”.

Including a ‘Notes’ section on your invoice is also worth considering. You can use the space to remind your client about any positive news about the work you’ve done and that will help soften the blow. For example, if you launched a new platform for a client, it would be a nice touch to refer to the success of the launch in the notes section. Perhaps even use this section to ‘cue up’ what work’s next (and therefore what you’ll be invoicing for next).

“What about that issue we discussed?”

The notes section is also a great place to address any niggly little doubts or unresolved issues that may keep your client from paying straight away. A lot of projects end up with a snagging list at the end, and heading off any questions about open issues can hopefully help close down a back-and-forth. Something like “Just a reminder that we’re meeting next Tuesday to agree a list of final changes” reminds the client that you’re on top of future changes, but they need to stay on top of paying you for the work you’ve already done.

Another sensible way to resolve any outstanding issues that may get in the way of prompt invoice payment is to encourage the client, agent or HR officer to phone you, and so ensure your phone number is on your invoice. Sometimes a brief phone call can resolve an issue much more quickly than an email chain.

“How long can have we got before we HAVE to pay?”

It can be awkward chasing payment if you haven’t specified a timescale so including clear payment terms on your invoice template is a good way to get rid of any uncertainty. If you still haven’t been paid by the ‘due date,’ you can feel better about sending them overdue payment notices -- but how long should you give them to pay?

Our research shows that the most effective way to get paid within a week of issuing an invoice is to have zero-day terms -- in other words, asking the client to pay immediately. If you don’t set a payment date the legal maximum businesses have to pay is 30 days -- after that you’re entitled to charge interest. However, it’s a good idea (and also a courtesy) to set out your payment terms and the interest you plan to charge in your initial contract as well as on your invoice.

“I’ll pay; but how am I meant to?”

Once your invoice recipient is ready to pay, you want to have everything ready for them so they can do it immediately. At a minimum, make sure that your invoice has your BACS payment details so they can send you the money directly, or even better, you can include immediate payment links to your financial platform of choice; PayPal for example.

Editor’s Note: Related Reading –

Contractors’ Questions: What’s the best way to number my invoices?

Contractors’ Questions: Is not using consecutive invoice numbers risky?

Contractors’ Questions: Should I stop work until my invoices are paid?

Contractors’ Questions: Must their invoice be paid even if we’ve shut?


Thursday 27th Oct 2016
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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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