Invoicing errors can derail project profitability, negatively affecting your cash flow. Often, construction and field service companies can become so focused on quality production that they make easily avoidable, expensive invoicing mistakes.
Modern e-processing software is designed to reduce or eliminate invoicing errors, estimating inaccuracies, and other mistakes that erode your project’s profitability and speed of completion.
In this article, we will explore how common invoicing mistakes happen and practical invoicing tips to avoid these errors before they occur.
Most Common Challenges in Invoice Processing
As we move into the 21st century the tools we use are easier to use, more reliable, and less expensive. However, we can get trapped in our comfort and fall behind the technological curve.
We don’t use hand saws if a power saw is available so why would we use paper if we have a supercomputer in our pocket? To remain competitive, we should use the tools we have available. If we don’t, we simply fall further and further behind until we can no longer compete.
Here are four of the most common challenges in invoice processing, and how they affect the quality of the invoices you create:
Challenge #1: Using Standalone Systems Instead of Multiple, Interconnected Software Apps
Using standalone software for invoice processing limits the effectiveness of any system because it may not evolve with the industry. Construction and field service companies that use multiple, interconnected software apps have a built-in advantage in functionality.
Challenge #2: Messy and Illegible Paperwork
Messy, illegible paperwork has no place among the most successful field service companies. We often provide a very high volume of invoices because we may perform several projects every day.
Messy paperwork is entirely avoidable, yet remains a constant source of profit drain. Investing in a solution that provides professional quality, accurate invoices eliminates this profit drain, while improving our customer’s perception of our business.
Challenge #3: High Invoice Volume
The sheer number of invoices we create in the field service industry can become a management challenge. Having a stable, efficient invoicing process helps eliminate the issues that can arise when invoices suddenly surge.
Invoicing solutions are designed to work harder than we ever could, so they don’t cut and paste like we do. High invoice volume is no challenge for modern invoicing software, so sudden surges in invoice volume won’t affect the quality or accuracy.
Challenge #4: Late Payments
Late payments are a part of any business, but we don’t need to add to the problem. Clients often can’t pay invoices that contain errors, like the wrong job address, name, and other project details.
In modern construction, invoicing software solutions are designed to help reduce late payments. Every detail is checked for accuracy, so if you experience a late paying customer, your invoice quality is much less likely to be the cause of the late payment.
The Impact of Invoicing Mistakes on Your Bottle Line
Consider the impact of mistakes on invoices when working with a client for the first time. Your bids, estimates, quotes, and invoices directly reflect your attention to detail.
Any correspondence you share with a prospective client is also your business card. Easily avoidable mistakes on invoices imply a sloppy work ethic. Invoicing mistakes can have a devastating impact on your reputation, and ultimately, on your profitability.
To illustrate how avoidable invoicing mistakes happen, let’s imagine a back-office employee creates an invoice. To create the invoice, they transfer the project details from a handwritten bill of materials and labor estimate, provided by a field technician.
Now imagine the office personnel misidentifying the per unit cost, failing to compare it to the bill of materials, and subtracting a zero from the total invoice amount sent to the client.
Because there are no cross-checks performed before the invoice is sent out (like requiring a purchase order number provided by the client), the invoice is mailed to the client. Upon receipt, the client pays the bill in full. As far as the client is concerned, the transaction is complete.
However, eventually, the invoice for the field technician’s materials arrives, indicating the actual amount of materials purchased, which is nine times more than they used. Now the company must negotiate a return with the vendor, and will likely be on the hook for return shipping costs.
Much to everyone’s surprise, the company is now upside down on the project many times over, due to a simple keystroke mistake. Plus, they’ve tied up their company’s credit line, potentially preventing the company from purchasing other materials for other projects.
In this situation, one tiny mistake caused an avalanche of expensive problems that could have been very easily prevented. Modern invoicing software performs a variety of verifications and cross-checks to prevent even the smallest gaps a mistake can fall through.
Proactive Invoicing Tips for Building Error-Free Invoices
As described earlier, error-free invoicing is often a result of focusing on the details. In field service, we often work with multiple clients in a single shift. Fatigue and the volume of information we must expertly manage can cause a mistake on an invoice to slip through the cracks.
Understanding how to prevent invoice mistakes from happening is a skill that can be applied over a career. Here are a few examples of how field service businesses can help prevent invoicing errors before they happen:
1. Automate Your Invoicing Process
Avoiding invoicing mistakes does require additional effort and diligence. However, using e-invoicing solutions can perform the number crunching, while you focus on the big picture.
Consider using invoicing software that automates calculations and provides built-in error-checking features.
2. Triple-check the Basic Project Details
Always verify the customer's details before sending invoices. One common invoicing mistake is sending an invoice to the wrong customer, which can be awkward and harmful to your professional relationships.
3. Define Clear Terms and Conditions
Clearly define payment terms with clients in advance to avoid misunderstandings. Whether you offer Net 30, Cash on Delivery, or other payment terms, ensure they are explicit in contract discussions and on the invoice itself.
4. Consider Using Incentives
Encourage clients to make timely or even early payments by offering discounts. This practice not only improves cash flow but establishes a mutual relationship with the client which is so important in field service work.
5. Provide Multiple Payment Options
Offering multiple payment options can encourage prompt payments. Make sure these options are straightforwardly listed on your invoice.
ClockShark’s Role in Flawless Invoicing
No two businesses are run the same way. That's why ClockShark allows you the flexibility to create invoices in the way that makes the most sense for you and your team.
ClockShark’s invoicing capabilities are designed to simplify and improve the invoicing process for service-based businesses, including those in the construction industry. It enables accurate, efficient, and professional invoicing, helping you manage your cash flow and client relationships effectively.
With ClockShark, you can create and send professional invoices via email in seconds and allow your customers to pay online, straight from their invoice. You can then track each invoice by status and get notified when they are paid or past due. It’s that simple!
Building Confidence in Your Invoicing Process
Having confidence in your invoicing system reduces stress, which, as we mentioned earlier, can be the source of avoidable invoicing mistakes. ClockShark invoicing solution is designed from the ground up to be the most reliable, effective, and accurate invoicing tool you can buy.
Check out our top invoicing software apps for contractors if you need more information on what these apps can do for your business. If you’re ready to take your business to the next level, sign up for ClockShark’s free 14-day trial and discover how easy it is to create and send customized invoices via email, track the status of every invoice, and get paid quickly.