IT contractor guide to invoices

When discussing payment of invoices with a new client or recruitment agency, it is imperative that you remember our recommendations in the previous article, pertaining to receiving and inputting the relevant information, accurately and in full. Many mistakes on invoices could be avoided at the outset by simple procedures and by ensuring you included the required information, correctly and first time.

Without the benefit of a crystal ball, this information will always be something that is best obtained from the client/agent but, as stated in our earlier guidance, you are encouraged to make your own checks and assessments on the information that you are provided with. This should also help you build a more thorough profile of the company you are dealing with, should one of your invoices not be paid, or worse.

Give the customer a say

Your invoice/s, and attachments such as signed time-sheets, should be clearly typed and unequivocal. This assists your customer approving the sum for payment. Don't be afraid to clearly state on your invoice the payment terms agreed as per the contract. Include contract number, and/or name of client in the case of working for an agency. Also, if you are VAT-registered, ensure you add the correct amount of VAT (not applicable on travel) as a separate addition, to the total sum of your invoice.

One of the simplest ways of achieving payment by due date is by asking your client at the outset of your relationship what is required on your invoice. Letting them tell you what they expect your invoice to state can overcome obstacles to obtaining a prompt and full payment. In addition, some agencies will accept an electronic invoice, or will create an invoice on your behalf if they use a self-billing system.

Make the 5-day window

No supplier appreciates receiving invoices late, and clients and agents are no different. You will normally find that any client's purchase ledger department will have a "cut off" date. This will usually be around five working days into the new month. As an example, if you invoice monthly then you must ensure that a January invoice is received by your client before the 5th day of February, a February invoice before the 5th March and so on. Making this window, ensures that your invoice is actually entered on their system as per the date on the invoice. Should it be received after these dates, you risk the invoice being entered into their purchase ledger late and this can cause you a month's delay in obtaining payment.

Gentle end-of-week nudge

Once you have sent your invoice, containing the information your client requires, after one week (depending upon your payment terms) contact them, confirm that the invoice has been received safely and that it contains all necessary information. This is good customer service on the contractor's part, and it will also highlight, very quickly, any possible queries on the customer's part, heading off the possibility of your invoice being shelved until next month.

Top of the Pile

Giving a gentle end-of-week nudge will help get your invoice to the 'top of the pile.' But this enviable position will also depend upon a number of things, including whether or not you entered the correct address and sent it to the correct address, and ensured you received and recorded other details accurately. A phone call from you to the client/agent a week before your invoice is due for payment is also advisable. Ask your client or agent politely whether the invoice has been approved and remind them that payment is due by a specific date. Enquire also how they intend to make your payment, whether by cheque, BACS or bank transfer. This will tell you how to expect to receive payment. You may also enquire at this time whether they send a remittance advice and how, if they pay by either of the latter two methods.

Top 5 invoicing mistakes:
1. Sending invoices late
2. Addressing the invoice to the wrong company, or not being clear about the company.. For example, ensure you put the correct company name (in full), as in: Take the Money and Run Ltd, rather than using the abbreviation of T.T.M.A.R Ltd
3. Addressing the invoice to the wrong address. It is imperative that you know, from the outset, when dealing with any new client, where they require their
invoice/s to be sent
4. Omitting any order number/s or contract number/s
5. Not enclosing any signed time-sheets required

Ask the experts

You can always seek assistance with payment of invoices and further advice on invoicing by contacting our credit management personnel, who offer advice free and in confidence.

Sid Home, managing director of Safe Collections, a debt recovery and credit reporting agency.
 

Editor's Note: You can download our free invoice template here.