Recurring invoicing: 7 mistakes to avoid

56 billion euros! That's the staggering amount of unpaid receivables in France, according to estimates by credit insurance specialist Coface. The first lever for avoiding late payment concerns the invoice itself. An invoice that is poorly drawn up will be poorly paid.

In a subscription-based business model, there are many more invoices than in a non-recurring business. So you need to be particularly vigilant when it comes to drawing them up, and treat this document as a communication tool between you and your customer.

Subscription sales create a long-term, long-distance customer relationship. It is essential that this relationship be based on trust. A poorly prepared invoice will damage this relationship, particularly in the case of pay-as-you-go models where transparency is essential.

So what are the billing mistakes you shouldn't make, and how can you avoid them? Let's take a look at good invoicing practice.

Mistake No. 1: not itemising costs

It's essential for customers to have a full breakdown of all the charges shown on their invoice.

This is particularly important when you use a pay-as-you-go billing model. In this type of model, customers want to pay for what they have used, but no more. The impact of their consumption must be clearly visible and understandable in the bill. Invoicing the customer using the usage model only makes sense if the model is valued in the invoice.

Depending on the complexity of the offering, the usage-based billing model can be difficult to implement. That's why a subscription-based sales management platform supports the invoicing model to make it fluid and attractive.

Mistake no. 2: not providing access to invoice download history

Although the retention period for invoices is regulated, most customers don't keep their e-mails, let alone their invoices. This is particularly true of small businesses, who have to chase their invoices every year at balance sheet time...

Offering a downloadable invoice history is a solution that is much appreciated by customers. Thanks to the use of a subscription-based sales management platform, the invoice history is complete:

• All invoices are available and can be consulted,
• All invoices can be downloaded in PDF format.

Mistake no. 3: not clearly specifying the status of the invoice (issued/due, paid?)

Subscription sales create a completely new customer relationship where the invoice is recurrent, generally every month, and where the invoice is often the only document that links you and the customer. It must not contain any ambiguities or inaccuracies, particularly regarding the status of payments.

The customer must be able to understand the position of payments and the exact nature of the invoice at a glance:

• An invoice may be "issued": this invoice has been issued and must be paid; the amount of the invoice is "due".
• An invoice may be "paid": the amount due has been debited. The amount debited according to the payment method entered was successful.
• The account balance may be "Nothing to pay": the account balance is sufficient to cover the balance required or to pay the amount due indicated on the bill. No additional debit has been made to the payment method entered. No amount is due.

Clearly itemising charges makes it easier for customers to keep track of what has been paid and what payments are due in the future. Together, these communication tools create a more responsive, ongoing and structured relationship between a brand and its users.

Mistake no. 4: not automating the representation of payment failures

When a payment fails, the start of the dunning procedure can be unpleasant, even vexatious, and lead to unsubscribing.

Thanks to an automated "dunning process", payment representation, sometimes multiple times, is automatic and above all discreet. This guarantees a good relationship with the user and is also an excellent way of preventing non-payment. This dunning process, which is specific to the management platform, recovers up to 15% of failed payments.

Mistake no. 5: not sending the invoice automatically by e-mail

As regulations move towards transparency and paperless invoicing, this is becoming essential and, little by little, compulsory.

It is compulsory for electronic invoices to be sent automatically by e-mail. It must be possible to consult the invoice from the billing history and from the customer's e-mail address.

Mistake no. 6: omitting regulatory elements

The invoice is proof of a commercial transaction. It has an important legal value.

It also serves as accounting evidence and as a basis for exercising VAT rights. To be valid, invoices must contain a certain number of mandatory items of information, failing which they may be subject to a fine.

⚠️ Reminder of mandatory information

Invoices must contain a wide range of information, including

• name and address of the parties
• date of sale or provision of service,
• quantity and precise description of the products or services,
• payment due date and penalties for late payment.

Sources: Service Public and Bulletin Officiel des Finances Publiques-Impôts

In addition, as part of the fight against tax fraud, the 2016 Finance Act, applicable from 1 January 2018, stipulates that all taxable persons liable for VAT selling to private individuals must have their transactions, i.e. everything to do with receipts, certified. From now on, businesses must use certified invoicing software and cash register systems.

It is therefore no longer possible for businesses to issue invoices using word processing, spreadsheets or any other non-compliant software. All businesses that cannot prove that they are using software that complies with the 2016 Finance Act could face a €7,500 fine and the obligation to equip themselves.

Mistake no. 7: applying the wrong tax to a foreign customer

VAT errors are common and generally fall into one of two categories. Either businesses simply forget to indicate it, or they indicate the wrong rate. If you mistakenly indicate too high a rate of VAT, the amount you receive will be owed to the tax authorities. What's more, if you issue an invoice to a company in another EU country, it's the recipient of the service who has to pay the tax - provided this information appears on the invoice.

When customers are not satisfied with their invoice, they have the right to dispute it, resulting in late payment and an invoice correction procedure. This is especially true if the customer is a major account.

Using a subscription-based sales management platform not only removes any ambiguities or uncertainties about invoicing terms and conditions, but also ensures full regulatory compliance and reduces payment times in the event of failure. It's a comprehensive, high-performance solution that optimises customer relations over the long term.

Points to remember

While acquiring a subscription customer is a crucial stage, it's the quality of the relationship that will turn them into loyal customers.

Key points to remember when invoicing your subscription customers with a subscription sales management platform:

• No more errors: the invoice is always correct
• Anti-VAT fraud certification
• Adaptable to pay-per-use invoicing and multiple associated offers
• Automatic and discrete display of payment failures

The entire invoicing process is optimised to improve customer relations and avoid recurring late payments.

Sponsored article. The expert contributors are authors independent of the appvizer editorial team. Their comments and positions are their own.