Still producing invoices manually? It’s time to stop.

Invoices have come a long way over the years. Paper invoices are pretty much a thing of the past now, and even sending invoices by email has been replaced by virtual options. Why should you switch? Virtual invoicing solutions offer stronger tracking, options to include lots of different kinds of payments and greater control over the details. If your small business sometimes struggles to get paid, updating your invoicing system just makes sense.

Here are the 5 biggest mistakes small businesses make when invoicing, and how to avoid them:

1. Writing your invoices using a word processor.

We’ve all done it – gone for the quick solution when you’re in a rush to get something done. For invoices, that usually means typing one up using a word processor. Why is this a problem? Well, for one thing, it’s hard to track payments and follow up when they don’t come in. If you use this system, you probably spend a lot of time each month comparing the invoices you’ve sent out with your bank statements, looking to match up the payments. But what happens if the payment isn’t for the full amount on the invoice? Or if the payer’s name in your bank statement isn’t the same as the name of the company that you’re doing business with?

Sending an invoice out this way doesn’t give the payer any options about how to pay. There aren’t any notifications in case of errors. There’s nothing to tell you who’s paid, and when, and how much. How do you keep track? Once you’ve done your manual tracking and figured out who hasn’t paid, how do you send a reminder? Do you update the word document? And are your invoices even backed up anywhere? What happens if your computer crashes?

The solution is simple: switch to an online invoicing system. Software that automates your invoicing takes care of all these details. It’s secure, there’s no hardware to crash (so you won’t lose any data), and it seamlessly links to your bookkeeping software to keep your business on track.

2. Unclear terms

When you’re creating invoices in a word processor, you’re probably including the bare minimum information: the work or product provided, the rate and the amount owing. But what happens if you must charge additional fees? How do you explain these to your customers? This is especially important if different clients have different terms because you’ll need to keep these straight on your side.

When you use an automated invoicing solution, it’s easy to set up specific terms for individual clients. Have clients who always pay late? An invoicing solution sends reminders automatically, and it calculates late fees and adds them to the total owed. And if you’re lucky enough to have customers who pay their bills early, you can even build in terms that offer a discount or some other “good customer” reward.

3. Bad information, bad math

Creating invoices manually increases the chances of making mistakes, usually because work isn’t itemized properly. Few things are worse for a small business than sending out an invoice with errors on it. It makes you look less professional, and the less professional you look, the less chance you have of getting paid.

Invoicing software calculates all the work that you’ve done for each client and pulls it together, nice and neat. And it goes without saying that there won’t be any errors calculating the taxes and fees!

4. Impersonal invoices

Raise your hand if this sounds like you: you’re creating invoices manually, and to make things easier, you use an old invoice as a template, writing over the details for each new one you send out. This means that sometimes you forget to update the invoice number. It also means that updating the customer’s name is a lot of work, so you keep it simple by leaving it out. And there’s one other problem here if you’re not even personalizing invoices for your clients, are you also forgetting to say thank you?

Using invoicing software doesn’t just make it easier to personalize your clients’ details (and thank them for their business!), it also helps your business stand out with professional templates and designs. You can easily include your logo, and your invoices can also feature taglines with details about special offers or sales.

5. Invoices that are hard to pay

No one likes paying bills. Making it hard for your customers to pay your invoices isn’t going to help you get your money any faster.

When you use an invoicing solution, it’s easy to include multiple payment types such as credit cards. Giving your clients a chance to earn reward points by paying your bill increases the chances that they’ll pay in full. You can also embed a payments link, which encourages quick payments.

Most of these issues can be avoided by using the right invoicing software. And if you’re going to argue that your business can’t handle the cost of buying another solution, ask yourself if you can afford not to? When you weigh the costs of the software against the costs of your time and the hits to your business that come from missed bills and inaccurate invoices, you’ll see that the choice is clear.