An important factor that SMEs should not leave aside is the issuance of invoices and control of each one of them. If there is no control over your invoices, they can have serious consequences such as complications or loss of data and records, affecting the finances of your company.
Here are the best tips to help you manage your business invoicing properly:
- Stay informed about the laws in your region.
In the region, there are mandatory regulations that involve the issuance of a fiscal and/or electronic invoice by the trade, so that there can be documentation of their operations and transfers. Not only is it mandatory, but subsequently new laws or amendments to previous laws are manifested, for example: In Panama, by Decree No. 766 of December 29, 2020, establishes the rules relating to the adoption of the Electronic Invoice for companies that are exempted from the use of Fiscal Equipment by the Directorate General of Revenue.
Keeping up with the latest government rulings can help a business keep its tax affairs in order, and it may even benefit you if your business meets current requirements.
- Validate and Register.
Validating invoices is essential to avoid scams through forged documents. These documents appear to be originals but this does not mean that they are official receipts to deduct or declare taxes.
The invoice must comply with all the components that make it valid, such as: logo, tax ID number (RUC), company name, address, details and type of sale, customer, taxes, discounts, return policies, among others...
Verify and check invoices before they are issued to avoid billing error claims. Then, keep a record of the invoices issued.
- Set Deadlines.
To avoid lack of liquidity or short-term debts, it is important to keep track of invoices for both purchases and sales. To do this, you must set a due date on the invoice, agreed with the customer and/or supplier, and register it in a management system that establishes a collection plan and generates alerts and reports on invoices that are about to expire.
Also, it is recommended that you set these payment deadlines to implement late payment conditions, such as surcharges through interest.
- Digitize.
Send digital invoices, and much better if they are sent in a format that does not allow editing, to avoid fraud, plagiarism, or unauthorized copies of your invoices. We recommend PDF format over Excel or Word. If you want to know details to digitize your invoices, read this article from InterFuerza for more details: Digitalization vs. Digital Transformation.
Additionally, having an automated billing system is ideal. It will help you minimize errors when issuing an invoice, which can trigger customer complaints, credit notes and/or returns.
- Plan.
It is recommended to have an invoicing and administrative management software to carry out all the movements of your invoices. If your company is very young and is starting operations, there are coupled systems for small businesses and adjustable as the business reaches a considerable customer base.
- File Your Taxes
Whether it is a firm of accountants or the owner of the company who is in charge of his own accounting, the deadlines for filing taxes must be taken into account. According to the Official Gazette of Panama, the final tax return must be filed 30 days after the closing of the Public Registry for legal entities and 15 days for individuals. For more information about the Panama Tax Return procedure, see this link.
In conclusion, you need constant control and planning of your invoices. Without it, you can cause losses or waste where it will be impossible to find out the origin if there was no record of your issued invoices.
Additionally, being informed of the legal statutes of the country where your business operates will help you know when to file taxes, evaluate our operational and business limitations, and analyze where to invest in paperwork and where we can save costs.