Making sure invoices get raised on time is a vital part of good credit control and helps business cash flow. Until you raise the invoice, you won’t get paid. It really is as simple as that. So the sooner you invoice the better.
If forgetting to raise an invoice is more than a one-off occurrence for your business, then perhaps it's time to consider hiring a management accountant or bookkeeper?
Remember a customer is not going to chase you asking you to invoice them as they will want to keep the cash. It is really important you keep on top of invoicing otherwise it will seriously affect your cash flow.
However some SME’s struggle to get their invoices out in good time. Perhaps business is booming and there just doesn’t seem to be enough hours in the day to get all the jobs done.You come to do your monthly or year-end accounts and realise you haven’t invoiced a customer for a job you completed several months ago, or perhaps even longer than that.
Well in short the answer is yes, unless more than six years have passed. The only regulations placing a time limit on collecting a genuine debt is the Limitation Act 1980.
Although you have the right to invoice, where the invoice is over 6 months old we would recommend to include a covering letter apologising for the delay or simply calling your customer beforehand to discuss the matter. This is especially true if the invoice is for a large amount and could cause difficulties at their end when it finally appears!
If they have been prudent then they should have accrued for this bill in their accounts, especially if it is a large amount. However for many businesses a late invoice may come as a shock when they receive the invoice.
As for any invoice, you need to make sure you still have all the information on record required to get the invoice signed off - the clients purchase order, contracts, quotes and proof of delivery such as a signed delivery note or works sign off sheets. This way although they may question the lateness of the invoice they cannot dispute it.
While you have a statutory right to apply late payment interest and compensation to overdue invoices, since the lateness of the invoice is down to your own error then we would not suggest you apply late payment interest to it.
However, if you have been unable to issue the invoice due to the customer’s error – for instance if they held things up by failing to issue you with a purchase order number - then you could apply theseadditional charges. You can use our late payment interest calculator to calculate hte amount to add. Backdate the invoice to the day you completed the works again make sure you have your signed contract to hand in case they dispute the invoice.
For more information of how to make sure your invoices are up to scratch take a look at this article and infographic on how to get your invoices right.
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