HomeAboutTestimonialsBlogContact UsFree Gift

On November 18th, 2016 by Alexander Hubenthal

How and When to Bill (Invoice) Your Customers

Posted In:

You want to be paid for the work you did right? Well of course you do but did you know that you could be doing things that might be delaying you being paid?

Here’s the bad news: In most cases, it’s really easy to mess up invoicing.

Here’s the good news: It’s really easy to prevent mistakes

When 2 or more parties agree to an exchange of goods and or services they usually will enter into some form of an agreement or contract. When this agreement is established and signed by all parties, they are agreeing to a lot of things that will affect the invoice process.

The 7 Must Haves for Every Invoice

  1. Your Business Name and Address. This is established when you file papers to be an official business in your state or providence.
  2. The Address and Name of the business you are invoicing. It is also important to add a contact name to your invoice here.
  3. A unique invoice or reference number for this invoice and this invoice only. PLEASE NEVER EVER USE AN INVOICE NUMBER MORE THAN ONCE. It makes us Accountants and Bookkeepers die a little on the inside every time we see this 😱.
  4. A date on the invoice. Usually the date the invoice is generated.
  5. A list of all the goods and or services you provided. These MUST be broken out on separate line items on the invoice with their individual cost.
  6. A Total amount for the invoice
  7. The agreed upon payment terms. This is how long the customer has to pay from the date of your invoice. Generally, the standard is 30 days. Some companies might go with shorter payment terms and others might go with longer payment terms.

I know Fortune 100 companies that are currently paying 120 day payment terms. Yes. You read that right. 4 whole months.

3 Things to Also Consider when Invoicing

  1. When working with bigger clients, they might provide you a Purchase Order or other reference number. This number should also be included on the invoice so your customer can quickly identify the charges and who requested the goods or services.
  2. It is beneficial if you include the ways you accept payment for the invoice (i.e. PayPal, Bank, Credit Card, etc.) and the associated links or bank account details on the invoice.
  3. If you charge sales tax or VAT tax on your invoice, it is important to either include or provide your EIN (in the USA) to your customer so they can cut down on time when it comes time to file taxes.

When should you invoice your customer?

As mentioned previously, when 2 or more parties enter into an agreement either formally (with a contract) or informally (by mouth), the timing of which that you can bill your customer will be established.

Billing for Services

When Rendering Services, you can bill one of two ways; before services are rendered or after.

When you bill your customer before you render services, you the service provider bear no risk. Meaning you won’t have to worry about going after the customer for payment after the service is provided. If you are just starting out, you might have a hard time convincing your customer to pay up front because they might not trust you and your business, yet.

If you decide to bill your customer after services are rendered, be sure that payment terms are agreed upon prior to services being rendered. Unfortunately, a lot of Businesses and People don’t like paying on time. This can lead to having cash shortage problems in your business and in some extreme cases it can lead to expensive legal costs.

Billing for Products

The majority of billing for products occurs at the time the order is placed. In Business to Consumer (B2C) transactions, billing and payment occur simultaneously. For Business to Business (B2B) transactions, billing occurs at the time of the transaction but payment is done in line with the agreed upon payment terms.

Billing for Construction

In the event that you work or know someone who works in construction or other blue-collar trade (HVAC, Plumbing, General Contractor, etc.) billing can reflect the service model or a payment plan system.

The payment plan system usually follows something like the following: At the beginning of the project (usually when the agreement is signed) a down payment of roughly 20% is required for work to begin. This 20% allows the business to put funds where they are needed (labor, materials, etc.) and then payments of 20% will continue when the company reaches milestones. Think of putting a roof on a new building as an example for a milestone.

On October 28th, 2016 by Alexander Hubenthal

Do you Need a Bookkeeper or an Accountant?

Posted In:

The Answer Might Surprise You.

Unknowingly, most business owners associate the name Bookkeeper or Accountant as one of the same. Do you know what the differences are? Are you getting the services you need to be the most successful business owner possible?

Who is the Bookkeeper and what do they do?

The Bookkeeper is the person in your business who “works in the trenches” of the business and are sticklers for the accuracy of all the transactions posting to the books.   One of the main components of Bookkeeping is maintaining the General Ledger and ensuring all activities in the business are posted properly to the ledger. Other activities include but are not limited to reviewing invoices, payroll, and bank reconciliations. Although no formal certification process is required to work as a Bookkeeper, these roles require at least some college and at least 2-4 years of previous work experience in an accounting role. Usually, the bookkeeper’s work is overseen by either the business owner or a qualified accountant.

When and why you would need an Accountant:

Unlike the role of bookkeeping, Accountants generally work at higher-lever processes. One of the biggest reasons business owners and people turn to accountants (also known as CPAs) is to have their tax returns done. In order for taxes to be completed, accountants make sense of all the information that was previously compiled by the business owner or bookkeeper. Accountants will also generally prepare adjusting journal entries, running financial analysis of the company to measure operational performance, and preparing financial statements. There are plenty of other activities that Accountants and CPAs work in including Auditing of financial information or some even provide bookkeeping services to smaller clients.

What is the cost to have a bookkeeper?

Depending on a multitude of factors including annual revenue, an average number of transactions per month, what type of services are required including AP / AR management, Budgeting, Invoicing needs, etc. Services can range from $200 - $800 per month. These are only estimates and reflect a range of bare bones services to having a complete turnkey solution for your small business.

What is the cost to have an accountant?

According to Investopedia, the hourly billable rate in 2016 ranges between $160-$312+ depending on the size of the firm that you are receiving your services from.  This rate generally includes all the services you would need from the firm. The same rate would generally apply for tax advice as would be the rate for basic bookkeeping services.

That said, it is generally much more cost effective to have a Bookkeeper working with you for a whole month in what you would pay for a few hours with an Accountant. It is important to note, however, that a collaboration between you, your bookkeeper, and accountant will contribute to the long-term success of your business and they will help you get back to doing what you love most.



HomeAboutTestimonialsBlogContact UsPrivacy Policy
© Copyright 2017 - Bookscaping, LLC - All Rights Reserved