Whether you prefer to invoice after a job is completed, or just flat out forgot to issue an invoice, you may be asking “how late is too late”? In this article, I will outline the best practices when it comes to invoicing retrospectively, and if there are any time limitations for the invoice to remain valid.
Ensuring that your invoices are raised on time will not only help you maintain the businesses cash flow and keep accurate records, but it will also help you get paid sooner.
I forgot to issue an invoice - Is there a time limit?
Until you issue an invoice, you won’t receive payment. So, if you want to receive your hard-earned cash, it is best to invoice as soon as possible.
If you are a bit forgetful, there are several business and time management applications that can help keep you on track. You may also consider hiring an accountant or bookkeeper to help you with your billing and accounting.
Regardless, if you forget to issue an invoice, you may be worried that it is too late and you have lost out on the money. The official rule in the UK is that you are able to chase unpaid debt from up to 6 years in the past.
That being said, if it has been several months from the end of the job and you forgot to issue an invoice, it would be courteous to speak to the customer or advise them what has happened and apologise for the inconvenience.
If the customer argues the payment, you will need to make sure that you have proof that the service or goods were provided.
Time limit for chasing missing payments on an existing invoice
So you’re going through some previous paperwork and realised that you never collected payment on an old invoice - what now?
Well, since you issued the invoice but forgot to follow up, it is technically a fault on your end. However, since it is genuine debt that you are owed, you can still chase the payment up to 6 years after the fact.
Again, it would be polite to explain to the customer what has happened and that you are sorry for the delay. You are, however, entitled to payment even if the invoice is long overdue.
Can I apply a late payment fee to payments I missed?
Technically, you have a statutory right to apply late fees to invoices that have not been paid on time. However, if the fault is on your end by not following up, then you may want to think if it is worth it to potentially lose the customer and receive a negative review.
If the late payment was the customer’s fault, for instance, their payment team had billing issues, then you are perfectly within your rights to apply interest or late fees.
You can find more information on the amount of interest you can apply, as well as fixed costs on late payments on the UK Government website.
Can I change an invoice retrospectively?
Yes, it is certainly possible to modify the invoice after the goods or services have been supplied.
To do this, you can cancel the original invoice by issuing a credit note. Then, you can create a new invoice with the modified information and send it along to the customer.
A little tip: Contact the customer prior to cancelling and modifying the invoice so that they are not surprised to receive the credit note and reissued invoice.
What is the correct time to issue an invoice?
Put simply, you should issue the invoice as soon as the service is completed or the product delivered.
The sooner you issue the invoice, the more it will be on the customer’s mind, and the quicker they will pay the amount due.
Although it may seem polite and less greedy to wait a few days to issue the invoice, allowing too much time may cause you or your customer to forget and ultimately cause you more issues.
Luckily, programs like invoicing software can help you issue and send an invoice in under a minute and also help process payments to make it a seamless process from beginning to end.
Always clearly state the due date
Invoices must always include the invoice date as well as the due date. By setting a due date, this encourages the client to pay you within a certain time frame.
The general rule is 30 days from the invoice date. However, you can discuss this with your customer and either make it shorter or longer than 30 days. Regardless of what you agree on, the payment terms and the due date must be clearly stated on the invoice.
When inputting a due date on an invoice, try to avoid ambiguity by following these simple steps:
- Be very clear on the payment terms: Instead of writing ‘end of the month’ or ‘last working day’, try to be more specific, for instance, ‘30 days from the invoice date’.
- Write the full due date: Instead of writing ‘March 31st’, write ‘March 31st, 2020’ or ‘31/03/2020’. This will avoid any confusion or disputes.
- Make sure the invoice date of issue is also written in full
- Write any additional payment terms or terms & conditions on the invoice (e.g. late fees), or attach them to the email along with the invoice.
Use invoicing software to keep on top of your billing
Invoicing and accounting is not generally the most exciting aspect of a business, however, it is extremely important. Invoices are an official business document and require specific information to be valid. That’s where invoicing software comes in.
Invoicing software like Debitoor allows you to create professional and customised invoices in under a minute. The software ensures that all of the required information is inputted so you don’t have to!
On top of that, you can also keep track of your financial records by running a balance sheet and profit and loss statement. If you are a VAT registered business in the UK, you can also submit your VAT return directly to HMRC using invoicing software.
Issue professional, customised invoices
What’s cooler than a customised invoice? Well, maybe a lot of things, but in the business world this is a great way to set you apart from your competitors.
With Debitoor, you can create customised invoices using our invoice designer. You can change the colours and fonts, choose from a variety of templates, and even add images and a logo.
Here is an example of a customised music school invoice using Debitoor invoicing software:
Issue payment reminders
Payment reminders are a great way of reminding your customer that the invoice needs to be paid. It is a simple document that you send to the customer advising them that the payment is overdue.
You should issue a payment reminder a few days after the invoice becomes overdue. With invoicing software, there are built-in templates that you can use, or you can create your own.
With Debitoor, we offer templates for a friendly first reminder, and a first, second, and third reminder, each offering different information.
Connect a payment method to your invoicing software
Invoicing software not only helps you to create beautiful invoices, but it can also allow you to accept payments from your customers!
With Debitoor, you can integrate different payment methods to link directly to your invoicing account. We offer integrations such as payment links, card readers, bank transfer, direct debit, mobile payments, and PayPal.
When you integrate a payment partner with your Debitoor account, you can choose to include a ‘Pay Now’ button directly onto the invoice, or discuss the best option for the customer to pay.
You can read more about payment options on our blog: ‘How to accept payment with Debitoor’.
Well this all sounds fine and dandy, but you’re still on the fence with signing up? Feel free to give it a try with a 7-day trial. No credit card needed and no questions asked! Questions? Feel free to shoot us an email to email@example.com.