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Translation and interpreting payment practices: Part III – invoices, revenue, rebilling fees |
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Monday, 04 October 2010 09:15 |
 In the third article on payment practices, we will look at some revenue numbers and how these numbers affect your invoicing process and vice versa. Some terminology used to refer to the status of an invoice as well as true cost of the rebilling process. A cup of good coffee should help you to stay awake. The rest is after the jump.
Please read articles on Forms of Payments and Invoice Payment Terms.
Invoice, as a document, is the final step before getting paid for your work. As we discussed earlier, it may also be the only document that instructs your clients how and when to pay. Working for multiple clients requires robust system of issuing and tracking of your invoices. Again, computer applications such as QuickBooks will help. There are some on-line alternatives that will also help you to stay organized. So how do you refer and categorize your invoices? The most common categories are:
Invoice due – is an invoice issued by you and should be paid by your client on or before the date indicated. These invoices are your revenue to be collected.
Invoice past due – is an invoice issued by you and is not paid by the time date indicated. These invoices are your revenue to be collected.
Invoice disputed – is an invoice issued by you and is not paid by the client. Your clients may (wrongly) dispute only some parts of your invoice, which automatically makes it an invoice held due to discrepancy (see below). When the entire invoice is disputed it immediately becomes an invoice for collection (see below). These invoices are your revenue to be collected.
Invoice held due to discrepancy – is an invoice that is held by the accounting department of your client. The reasons may vary from wrong mailing address and bank account to wrong items or totals. These invoices are your revenue to be collected.
Invoice for collection – is an invoice that is refused to be paid by the client and may require legal action in order to collect the payment. These invoices are your revenue to be collected.
All invoices combined are called outstanding invoices.
While there are no specific rules how much you should have in outstanding invoices, we recommend the following formula. Total amount in outstanding invoices should not exceed 2 months of your operational revenue. In other words, if your average monthly revenue is $5,000.00, your outstanding invoices should not exceed $10,000.00. The only reason the outstanding numbers may grow is some serious business expansion. When you work on large projects, consider partial payments to keep your outstanding balance in check. Also remember, for any business, it is easier to pay in smaller chunks.
Rebilling fees should be printed on your invoice. Since your invoice is the final documents, unless your client disputes the invoice or holds it due to discrepancy, the rebilling fees are there to stay. Consider printing some flat fee plus interest that your bank is paying to you, when you put this money on your account. This will play well in the court system of any country, as it shows you actually lost the bank’s interest, due to the late or refused payment. Flat rebilling fee should be reasonable and must incorporate all the time you spend to review the unpaid invoice, review customer’s account, generate new invoice, write a letter or an e-mail and send it out.
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