Print separate invoices for each line item

An invoice that contains many line items is inherently more complex than one containing a small number of line items, and so is more likely to be rejected by a customer. Such a rejection may be based on a single flaw on one line item; the rest of the invoice may be fine, but will not be paid until that single line item is corrected. This can be a major problem when the total amount billed is quite large, and especially when the seller needs payment in order to stay solvent.

A possible solution to this issue is to split a large invoice into several smaller ones. By doing so, it is more likely that some invoices will be paid promptly, leaving fewer receivables at risk of delayed payment. However, this approach is also inefficient, since more invoices are being issued. Consequently, confine its use to large-dollar invoices, where the prompt receipt of cash is critical. It is less necessary to use this approach when the total dollar amount at risk is relatively low. A refinement on the concept is to put the largest-dollar items on separate invoices, and cluster all other line items on a single separate invoice; this reduces the total number of invoices while still improving the odds of being paid for most of the amount within payment terms.

Related Courses

Bookkeeping Guidebook 
New Controller Guidebook