Everything Small Business Owners Get Wrong About Invoicing Their Corporate Clients
Working with corporate clients is one of the great ambitions of many small business owners and freelancers. The projects are larger, the budgets are bigger, and the prestige of having major companies on your client list opens further doors.
What nobody warns you about is the accounts payable department.
Corporate clients do not pay invoices. Corporate accounts payable departments process invoices, and they have requirements, procedures, and approval workflows that can turn a straightforward payment into a six week process if you are not prepared for them.
Here is what you need to know.
The Purchase Order Number Problem
Many corporate clients require a purchase order number on every invoice before it can be processed. A purchase order is the internal document their procurement team generates to authorize the spend. Without the PO number, the accounts payable team literally cannot process your invoice regardless of how good your relationship is with the person who hired you.
Before you send any invoice to a corporate client, ask whether they require a purchase order number. If they do, get it before you start the work. If you send an invoice without it, the most likely outcome is a delayed payment and an email asking you to reissue the invoice with the PO number included.
Vendor Registration
Some larger corporations require suppliers to be registered in their vendor management system before any payment can be processed. This process can take anywhere from a few days to several weeks and involves submitting business registration documents, bank details, tax information, and various other requirements.
Ask about vendor registration requirements as early as possible in the client relationship, ideally before you agree to take the project on. Discovering that you need to complete a three week vendor registration process after you have already delivered the work is a deeply unpleasant experience.
The Invoice Format Requirements
Corporate clients often have specific requirements for invoice format. They may require a specific file format, a specific layout, specific information in specific places, or invoices submitted through a specific portal rather than by email.
Ask your contact at the start of the relationship whether there are any invoice format requirements. A brief conversation upfront prevents a potentially significant delay at payment time.
The Corporate B2B Invoice Template is structured to meet the standard requirements of most corporate accounts payable departments. All the necessary information present, clearly organized, and in a format that works for professional procurement processes.
Payment Terms Are Longer Than You Are Used To
Many corporate clients have standard payment terms of net 45 or net 60. Some larger corporations have net 90 as their default. This is not negotiable in most cases. It is their internal policy and your invoices will be processed on that timeline regardless of what your invoice says.
Before taking on work with a corporate client, understand their payment terms and make sure you can manage the cash flow implications. If a net 60 payment on a large project would create serious cash flow problems, you need to either negotiate a deposit, arrange a credit facility, or reconsider whether the engagement makes financial sense.
The Approval Workflow Reality
Even after your invoice is correctly submitted with all the right information, it still needs to travel through an approval workflow. Your contact approves it, their manager approves it, accounts payable processes it, treasury releases the payment. Depending on the organization and the invoice amount, this process has multiple steps and multiple potential delays.
The most common delay is your contact not approving the invoice promptly because they are busy and the invoice sits in their queue. A polite email to your contact saying you have submitted the invoice and asking them to approve it in their system is entirely appropriate and often necessary.
Building Corporate Client Relationships That Pay on Time
The single most valuable asset in a corporate client relationship is a good internal champion. Someone within the organization who values your work, advocates for you internally, and is responsive to your communications.
A good internal champion will approve your invoices promptly, escalate if there are delays in the payment process, and warn you about any upcoming procedural changes that might affect your invoicing. Cultivate these relationships. They are worth significantly more than any invoicing trick or template.
The Legal Time Billing Invoice is worth considering for corporate clients who require detailed time based billing. Particularly in professional services engagements where the client needs to see exactly what time was spent and on what activities.
When to Escalate a Late Corporate Payment
Corporate payments occasionally get lost in the system. An invoice that was submitted correctly, approved promptly, and should have been paid by a specific date sometimes just does not arrive. This happens and it is usually a processing error rather than intentional delay.
After a payment is one week overdue, contact your internal champion rather than accounts payable directly. Ask them to check the status in the system. This is usually resolved within a day or two once someone looks at it.
If the payment is two weeks overdue and your champion cannot resolve it, ask to be connected with their accounts payable manager directly. At this point you are dealing with a process problem rather than a relationship conversation and the professional approach is to address it at the appropriate level.
The Mindset You Need for Corporate Client Work
Here is the honest truth about corporate clients. The money is better, the projects are more interesting, and the relationships can be genuinely rewarding. The administrative overhead is also real and if you go in unprepared for it, the experience can be frustrating enough to put you off entirely.
Go in with the right expectations. Understand that the accounts payable department is not your enemy. They are processing hundreds of invoices from dozens of suppliers and they need yours to meet their requirements before they can do anything with it. Make their job easy and your payment arrives faster. Make their job hard and you join the pile of invoices that get dealt with eventually.
The Retail Invoice Template works well for product based corporate billing where the requirement is clear itemization of goods supplied rather than services rendered. Know which template serves which situation and your corporate invoicing experience will be significantly smoother than most small business owners manage in their first year of working with large clients.