How to discount an invoice the right way
Excellent reads!!! I love the discounting the invoice article. So true.
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Years ago, I sat next to another accountant at a continuing education seminar. We got to talking about our practices, how we got in the business, and how we built our client base.
She mentioned that she recently had a problem with a new group of referrals. A younger client loved her service so much that he had referred several new clients, including his family and friends. So, naturally, she had discounted his bill as a thank you for the additional thousands in revenue. But, when he got his final invoice, he was FURIOUS! His invoice was significantly less than those of his friends and family. He thought she was overcharging his referrals and was incredibly upset!
Now, I’ve discounted a few invoices in my time (shh, don’t tell anyone 🤫) and I’m sure you have to. But, there’s a right way and a wrong way to discount an invoice. My accountant friend had discounted the invoice the wrong way which led to her predicament. And, with all this COVID craziness, you may find yourself discounting invoices for struggling clients, but when you do, make sure you discount them the correct way.
How to correctly discount an invoice:
- create the invoice as you normally would but include an extra line item for the discount so the client can see both the original invoice amount and the discounted amount
- make the discount line item as descriptive as you can (some examples I’ve used, ‘Senior discount’, ‘Returning client discount’, ‘Referral discount x3’, ‘High school friend discount’)
- tell your client why you discounted their invoice. If you send invoices electronically, include it in the email or, if you can’t, include it in the invoice notes field
- sincerely thank your client for whatever they did to deserve the invoice, but don’t mention the discount in your thank you
You want to make your client aware that you discounted their invoice. But, you don’t want to overcommunicate it. Adding the descriptive discount line on the invoice, mentioning it when you send the invoice, and thanking them should be enough to get the point across.
THIS WEEK’S ACTION ITEM: Add more information to your invoice template. Addresses, contact info, and logos may seem superfluous, but they make your invoices (and you) look more professional.
Have a good weekend and stay safe!