Common Errors in Childcare Invoicing and How to Avoid Them

Handling your invoicing correctly is a key step to ensure your business has a healthy cash-flow and a plump bottom-line. Get the process wrong and you could be on the road to delayed payments, muddled accounts and a strained relationship with your customers. Here is a look at some of the common invoicing mistakes childcare providers make.

Getting the details wrong

Misspelt names, incorrect amounts and wrong payment details are some of the common invoicing errors that can hold up your payments and add to your admin load. If you create your invoices manually, make sure you get into the routine of giving your invoice a once-over before it leaves your inbox. Ensure all payment details and contact information are correct and easy to read. And remember to scan through the recipient’s email id one last time to ensure it is addressed to the right person.

If your centre processes a large number of invoices each month, automating your invoicing can help you bring down human-error and improve efficiencies. Childcare invoicing systems automatically pull out details from your booking calendar and drafts out batches of invoices based on custom criteria. This reduces manual intervention and makes invoice generation considerably quicker and more accurate.

Deleting cancelled invoices

One of the golden rules of invoicing is - you cannot issue an invoice to a customer and then delete it from existence. Cancelling out incorrect invoices need to be done carefully as it can wreak havoc in your book-keeping and also raise a red flag to tax authorities. You could raise suspicions of tampering with the records to hide money from the authorities and set off audits and penalties.

If you are in a situation where you need to cancel a wrong invoice or issue a partial refund, it’s best practice to issue a new invoice 'with a new invoice number'. Once that’s done, attach a credit note to the old invoice, describing it as partially or completely cancelled.

Creating a credit note

Like invoices, credit notes also follow a specific format, and they have to be created within 30 days of the agreement with your customer to change the invoice amount.

Here’s a quick look at how to create a credit note:

Start with a heading that's clearly titled as 'credit note' to make sure your customer, staff, accountant or any other entities who go through your invoices will know what it is. The note should then clearly detail the following:

• The amount that is reduced from the invoice
• An identification number (like your invoice number) so that it’s easily searchable
• Issue date
• Your business name, address and VAT number (if applicable)
• Name and address of the customer it is being credited to
• The reason why the credit is being issued, e.g.)The customer was billed the wrong amount

If you are using a childcare invoicing systems like Cheqdin, you can generate credit notes for existing invoices and update changes directly on the system.

However, remember credit notes should only be issued if:

• You need to cancel an invoice
• Credit back part of an issued invoice
• If the parent/carer has requested a refund

You cannot issue a credit note if you are forced to write off unpaid dues from a parent, and are sure you will not recover the money from them. In such cases, label the invoice as 'bad debt' and enter it in your accounts as business expenses.

Interested in automating your invoicing and payment collection? Get in touch with our product expert for a quick demo or try out our 7-day free trial.

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