Incorrect invoicing: Eight reasons why you’re waiting longer than necessary for your money.
Write an invoice and receive your money: For freelancers and small business owners in particular, this is the ideal scenario. But often, there is a delay in receiving the payment. Or the client even sends the written invoice back because it hasn’t been issued correctly. To avoid this, businesses should observe the following tips when invoicing.
1. Company name missing or incorrect.
2. Imprecise description of service/performance.
3. No consecutive invoice number.
4. Sales tax incorrectly stated.
In the case of sales tax there are two sources of error. Not only do companies forget to indicate sales tax altogether, they also specify the incorrect rate. In Germany, for instance, for some categories of goods like food and many services like journalistic writing activities a lower rate of sales tax of 7 percent applies instead of the usual 19 percent. If you incorrectly specify a rate of sales tax that is too high, that is the amount that you will owe the Tax Office.
Incidentally, if you issue invoices to companies in other EU countries, the recipient of the service is liable for the tax – but only if you specify this on the invoice. Excepted from this ruling are small business owners with a turnover of less than EUR 17,500 per year. In accordance with Section 19 of the German Sales Tax Law they do not have to indicate sales tax. However, small business owners must include in the invoice a reference to their exemption from sales tax liability.
5. Credits and discounts not clearly identifiable.
6. Digital invoices in the incorrect format.
7. No separate process for corrected invoices.
8. Retention period incorrectly calculated.
Look at the bigger invoicing picture.
Or the invoice is right at the bottom of the package and is disposed of inadvertently along with the padding material. For business operators the result is extra work that could easily have been avoided. So that they don’t have to wait longer than planned on their money and ultimately get into payment difficulties themselves.