All written communication to your members are essential messages and invoices are no exception. It is important to structure your invoices effectively, making sure that the message is clear, the information is correct and payment of the invoice is easy. In this two-part post, we will be looking at:
1) How to set up a system for generating invoices, so you don’t end up creating them all from scratch.
2) What details are of absolute importance for your invoice. Check, check, double check!
Invoices send an important message to your coworkers. Invoices outline what amount the person owes you, what services/products they owe you for, and how they can make their payment. Getting paid might be a different story, but it is certainly not a separate process. Therefore, it is important to design your invoice's in such a way that it supports the goal of receiving due payments.
When getting started, individuals or small contractors might initially get a little overwhelmed and will need some time to get organized when it comes to setting up an effective invoicing system. After all, invoicing not only entails drawing up and sending off the bill; you’ll also have to follow up and make sure the payment arrives in good order and into the right hands.
Large companies tend to have much bureaucracy, and your invoice may have to pass through several departments before it is processed. Some very small details can make the difference between an invoice that is paid directly upon arrival and one that stays on a desk for weeks or months - and might even end up written off in your books. Don’t leave this to chance. Be the master of your destiny and do what’s in your power to make immediate payment a habit of your coworkers/members. Offer automatic payment methods to shorten the time it takes to process invoices and ensure a fast resolution of billing queries, increasing your accuracy and making communication seamless.
But first thing’s first: If you want to receive timely payments, the first step is to make sure that your invoices are compliant with your local laws and regulations and that all the information your coworker needs is included. We have put together some tips that will make your invoices send a clear message and make payment easier for your coworkers - and payment collection easier for you!
It is a good idea to have an invoice template with all the information you need to display in ALL your invoices. For the moment, let’s leave the details and the appearance of the invoice aside and focus on what is legally required or part of your business strategy.
As well as the word invoice, you should always include a unique invoice number - and invoice numbers must be consecutive. This is not just a best practice; in most countries it is the law. If you are a new business, check with a local consultant to find out if there is a standard invoice number format that applies in your country and if so use it on all of your invoices.
Add your complete contact details to your invoices: postal address, phone number, and email. In some countries you are even required to add the name of the founder of the company to your invoices, or what your registration number is with the chamber of commerce. The key is to make sure that invoices include all your details and that of your coworkers’. Doing this will reduce the time it takes to resolve any disputed invoices and save money you could otherwise spend paying your own taxes (yay!).
Pay attention to spelling, both for names and addresses, and make sure you include the members/coworkers tax payer ID if this is mandatory in your country. This unique reference number is used for tax returns and differs in format and name in each country. In some countries, this ID must be included in invoices that fall into a certain category, in other countries it is never used (only when filling out tax returns) and in again others it is mandatory on every invoice. Breaking these rules can make you subject to huge fines if you break tax law. Check with an expert to find out what is mandatory and then include this field in your invoice template to make sure you don’t forget it.
Ensuring that you collect all the information and documents you need from your coworkers at the earliest stage of your relationship, or whenever there is any change, will save you the time and hassle that comes with correcting and reissuing invoices. Keeping an up-to-date contacts database and storing whatever documentation you could need from your coworkers (passport copies, company registration papers, etc.) in one single place will help you in this endeavour. Use Cobot or another collaborative management software and ask your coworkers to fill out and maintain their own contact details. This will save you time and ensure that your database is always up to date.
Make it easy for your customers to understand what they’re paying for. ‘Coworking Membership - Full-time Plan’ or ‘Drinks & Snacks’ are good examples of names for your services and products. ‘Green Unicorns Academy’ (for a software development workshop) or ‘Brew’ (for coffee) may go with your community’s tone and style, and are great for your marketing materials, but you do risk driving a couple of accountants crazy. And take it from us: you will want happy accountants! :)
These three dates should always be included on all invoices:
Whether a monthly fee or a one-time charge, you should always refer to the date on which the service was provided. This small detail can save you emails back and forth finding out at what time and on which date meeting room bookings took place. The service dates are also particularly important for spaces that charge membership fees in advance and services at the end of the month, as this might otherwise cause some confusion concerning the basis for the total amount on the invoice.
When was the invoice created? This date will help you calculate how long it takes before you receive payment. For variable billing periods it usually denotes the cut-off date for one time charges.
Always include a crystal-clear due date on your invoices. If your invoice does not display the payment date, it can easily be interpreted as “pay when you can”. The use of expressions such as “30 net” or “next month” can lead to confusion. Be direct. Speak in terms of days. For instance “Please pay your invoice within 10 days after the issue date” or a simple “Due date: 31 March” have proved effective. From experience, we can recommend the first formula as the most effective. If you use Cobot, you can include your payment terms in your invoice template footer to ensure they’re printed as part of every invoice you send out.
It may sound obvious but you need to ensure that the total invoice amount is the sum of all items listed on the invoice. It is also a good idea to check that the VAT/Tax calculation is correct. However, this is not so obvious when using a spreadsheet template or a text editor. Tools like Cobot can help you with this by keeping track of memberships and recurring fees; offering a point of sale to add one time charges; tracking meeting room usage and bringing all of these fees together in the invoice. Automated billing is not error-free, but it does reduce errors and save time.
Of course, if you prefer to manually write each invoice, you can do so as long as you are aware that this increases the risk of mistakes. You are therefore advised to come up with ways of reducing any errors such as using checklists or running pre-invoicing checks.
Check out our full collection of resources for starting up a coworking business. You can also read our blog and follow us on Twitter, Facebook or Instagram for more tipps and news around coworking space management. You have additional questions or feedback? Suggest new topics at firstname.lastname@example.org.