in·voice /'in vois/
1. a list of goods sent or services provided, with a statement of the sum due for these; a bill.
Synonyms: bill, account, statement, statement of charges, itemization, reckoning, tally;
And likely putting your clients in compliance jeopardy...
The invoice is considered a critical piece of communication between service companies, their clients, and their clients’ internal teams. Its purpose is to get you paid and to explain charges or costs to the client. It’s supposed to be simple. But it’s gotten complicated. At trakref, our primary concern is helping our clients achieve compliance, but our experience also suggests that a lot of invoices don’t get paid in a timely manner. Here are the top 10 reasons why:
1. Forgetting to invoice
Obvious? Sure. Invoicing can sometimes complete slip the minds of business owners because they have so many tasks to tackle every day. But these days the invoice is more than just a record of labor and materials. It's a record that shows who was there, when, where, and why - it's a detailed record affirming that things happened. Today it's just as important to get equipment running as it is documenting how you accomplished that, and what the results were.
The best time to send out an invoice is immediately following the completion of a project or a sale. Your clients need the record to document the install date, addition of material, leak inspection, or repair – this might be the only record they have in the event that an auditor or inspector comes on site. We have seen instances where the service people don’t send in the paperwork for weeks. By the time the invoice or documentation arrives, it’s already late and the owner is out of compliance and in violation.
3. Not following up on incomplete service tickets
You did not finish the work. It was Monday night, or Friday, or rainy, or whatever. But but whether you were waiting on parts or unable to get back due to timing, you have to document that work is still outstanding. Even if the client knows there is a leak and did not want to pay you to make the repair, you are still obliged to document the fact that the repair is unfinished. The oldest service ticket should be before the data is stale or could cause problems – that would be 10 days.
Depending on the violation, regulators allow businesses only 10-30 days to make changes and repairs. So each of the above three invoicing mistakes could directly force your clients out of compliance. They can’t show work has been done or why something has not, they take the hit, and they won’t be paying you.
4. Providing unclear terms, and not paying attention to your client's terms
Both you and the client have terms, yours being specific to what work is expected, and how you are to be paid. Client terms define what they would consider to be a success. Your client’s successful outcome isn’t paying you. Success means they are in compliance and in spec. Be aware of your obligations, be clear with your clients about your boundary lines on repairs versus replacements, and don’t hesitate to explain why you have those boundaries. If a client is left to assume that your terms align with their specific compliance requirements, and ultimately the work completed does not meet those standards, they will withhold payment. Directly ask what documentation the client requires for compliance, but also keep up with what the regulations are yourself. Keep both of your terms in mind and pay attention to managing expectations. You could be doing great work, but if it’s not done in an orderly and timely way, you could be costing the client undue stress, and yourself “free” additional work. Going through this process and having a well-defined set of expectations that will be recorded on the invoice will make things go more smoothly.
I watched a vendor not pay more than $10M of maintenance invoices because they didn’t meet the invoicing requirements.
5. Not signing a contract ahead of the invoice
The contract can either be a point of collaboration or frustration. Your invoice will be based on the specifics in the contract. To avoid the issues in #5 above, know the importance of being specific about terms and obligations like when, how, where work should be completed, who is responsible for what (you or the client), and how the client can become compliant. In almost all the cases where we are having difficulty getting records from a contractor, there is very little awareness about how important these details are.
We had a client whose vendor was asked to clean a grease trap. There was not a clear, written communication of what “disposal” meant. There was no contract. So when regulators discovered the vendors were improperly disposing of the grease, and there was no contract to clarify responsibility, both the client and the vendor were fined.
6. Sending invoices to the wrong person
Likely in a facility you have a primary contact - a great person with whom you have a working relationship. But in many cases the bill won’t be paid on site. The team of people actually reviewing records, accountants, operations managers, compliance managers, etc., have no idea how close you are to your client, or how well you did your job. Furthermore, the facility manager's only goal is to make sure equipment is fixed, whereas the requirements of everyone else involved could be far more detailed. So ask who is involved in reviewing the invoices. An overly simplified invoice is just a bunch of numbers, which is neither helpful to them for conforming to compliance records needs, nor is it helpful to you in demonstrating your intimate knowledge of the equipment, and the thoroughness and efficiency of your work. The invoice is the record that will be used by teams of stakeholders, likely off site, that will read, review and be impacted by your record/invoice, so keep in mind that they may have influence over the decision to retain your services.
7. Incorrect or missing detailsIn November of last year I reviewed over 1,000 invoices. All of them were missing some combination of the following:
- Legal company name and number
- Office address
- The client’s name and address
- Invoice number
- Invoice date
- PO Number
- Due date
- Itemized list of products or services that provided
- Asset worked on (was either missing or incorrect)
- The exact work performed
- The specific dates that things happened
8. Failing to itemize
It’s hard to believe this, but your client doesn’t care that you showed up at 8 at night or that you stayed until 2 in the morning. They care about what you were doing when you were there. Itemized lists are crucial. And I don’t mean long hand-written notes. The longer the note the less likely it is to be read, and it requires that your client to take too much time to read your handwriting and understand your thought process. The service company who sent in the invoice with the most complete, succinct and accurate results is getting paid the fastest.
I read 50 invoices the other day only itemizing labor - when they were there and how long, but not what was completed. Those missing items may have a compliance item related to it. The client is relying on you to supply this information so they can manage it. If you don’t tell them you took out 10 lbs of refrigerant, they won’t know where it went. They’ll assume it leaked.
9. Not demonstrating alignment with your client’s goals
Have you ever asked your client what maintenance software they use or what asset management system they rely on in accounting? Or have you asked them about their energy goals or how your work will impact energy consumption? If you are just coming to get things working at the cheapest cost, then I suppose the thorough invoice we’ve been discussing is a waste of time. But even if your clients are paying the most reasonable price, they are expecting and deserve the best service. Show them you understand by asking what the goal should be, how you can best help them accomplish that goal, and documenting carefully how those goals were met on the invoice.
10. Delivering invoices that are unclear or confusing
Concise, complete, and easy to read invoices are so rare that clients often send them to us for translation. Keep in mind that your client is likely reading invoices from lots of vendors and all of your formats are different. They sometimes include unexplained actions, or items are expressed in a shorthand only understood internally. Sometimes even fail to highlight issues, or alert clients to potential or actual compliance violations! If you have advanced your resources and are no longer relying on hand written paper tickets, good for you. You have removed the most challenging aspect of all of this – reading people’s handwriting. But regardless of what system you're using, it is still essential to be focused, clear and complete.
In my opinion, the traditional invoice is the worst document to provide the client with peace of mind, or even act as a record that is supposed to touch so many departments and impact so many other aspects of the business. It’s a decades-old framework intended solely to facilitate payment for services. Here at trakref we respect the goals of the invoice but believe in a more robust process for communication. One that can accommodate the needs of stakeholders everywhere from accounting and finance to compliance but also the needs of assert, energy and facility managers everywhere.
At trakref we found a different way. It works, it is simple,
and we can show you how. Click below to find out more.