Coworking First Steps
Every time you make a point of connection with your coworkers is important: invoices are no exception! Structure your invoices effectively; make sure that their message is clear; and ensure that paying the invoice is easy. In this two-part post, we will be looking at:
1) How to set up a system for generating invoices.
2) What details you need to make your invoices effective.
What Are Invoices And Why Should You Care?
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. It is important to design your invoices in such a way that it supports the goal of receiving timely payments.
It’s easy to overlook good invoices when you’re getting set up. After all, invoicing doesn’t just mean writing down what’s owed and hit send; you’ll also have to follow up and make sure the payment arrives in good time and into the right hands.
If you’re invoicing a large company, your invoice will pass through several layers of bureaucracy. A few small details can make the difference between an invoice that is paid immediately and one that takes weeks or months—and might even end up as a write-off. Don’t take this chance that you’ll end up spending more time tracking down invoices than they’re worth.
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!
Let’s start by focusing on what is legally required as part of your business strategy.
Title And Number
As well as the word invoice (we’ve seen people forget this!), 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.
Up To Date Contact Details
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 broad strokes: make sure that invoices include all your details and that of your invoice. Doing this will reduce the time it takes to resolve any disputed invoices.
Correct Payer Details
Pay attention to spelling, both for names and addresses, and make sure you include the members/coworkers tax 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 make you susceptible you to massive fines if you end up breaking tax law—even accidentally. Check with an expert to ensure your compliance with the law.
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 time and hassle. Keep an up-to-date contacts database so that you aren’t tracking down members individually or adding layers of work for your bookkeepers; 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.
Use Descriptive Service Names
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. Getting too creative and going with “Green Unicorns Academy” (for a software development workshop) or “Brew” (for coffee) may match your community’s tone and style (and marketing materials), but you risk driving accountants nuts. And take it from us: you want happy accountants!
These three dates should always be included on all invoices:
Whether you’re billing a monthly fee or a one-time charge, you should always refer to the date on which the service was provided. The service dates are also particularly important for spaces that split their billing, charging membership fees in advance and services at the end of the month.
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 (or final step) 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.” Avoid vague or open-to-interpretation terms like “next month” or “30 days after receipt.” 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.” 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 and must be double-checked. 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 dramatically reduce errors and save time.
Of course, if you prefer to manually write each invoice, you can do so—but be aware that this increases the risk of mistakes. We would advise you 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 tips and news around coworking space management. You have additional questions or feedback? Suggest new topics at firstname.lastname@example.org.