Issuing invoices at the end of the following month looks like an administrative detail. It is the task that always gets pushed back, because nobody ever complains about it — the work has already been delivered, the client is happy, and the invoice goes out whenever it goes out.
In cash terms, that detail costs more than many line items management tracks to the cent. This article puts a number on the problem and shows how to fix it without hiring anyone.
What is the legal deadline for issuing an invoice in Portugal?
Article 36 of the Portuguese VAT Code requires an invoice to be issued no later than the fifth business day after the point at which VAT becomes chargeable — that is, the moment goods are delivered or a service is performed. For continuous services, the relevant moment is the end of each contracted period.
On top of that, invoice data must be reported to the Portuguese Tax Authority by the 5th of the month following issuance, under Decree-Law no. 198/2012.
Put plainly: a company that invoices March's work at the end of April is not just being slow. In most cases, it is past the legal deadline.
How much does it cost, in euros?
Take annual invoicing volume and the average number of days between delivery and issuing the invoice. A company invoicing €600,000 a year, with an average delay of twenty days, has permanently tied up:
600,000 × (20 ÷ 365) = €32,877
That is money the company has already earned, is not using, and is not even counting as accounts receivable — because the invoice does not exist yet. If that gap is plugged with a credit line at seven percent a year, it costs around €2,300 a year in interest. If it is plugged by delaying payments to suppliers, it costs commercial terms. If it is not plugged at all, it costs sleepless nights at the end of every month.
The costs that do not show up on the statement
The financial cost is the easiest to calculate, and the smallest of the four.
| Cost | How it shows up |
|---|---|
| Financial | Interest on financing money that was already yours. |
| Collection | An old invoice is always harder to collect than a recent one: the longer the gap between delivery and invoice, the easier it is for the client to dispute what is on it. |
| Omission | Delivered work that never gets invoiced at all. Rare, but it happens — and it is usually only found by accident, months later. |
| Information | Until there is an invoice, there is no revenue recorded. The month's margin is wrong, the budget does not add up, and management decides on incomplete numbers. |
Why do companies invoice late?
Because invoicing depends on a confirmation that never arrives
This is the most common cause. Whoever invoices does not know the work is finished, and whoever knows is busy. The invoice waits on a piece of information nobody defined who provides, or when. The fix is not to chase harder: it is to decide which fact triggers invoicing — the signed delivery note, the closed timesheet, the contract date — and make that fact sufficient on its own.
Because invoicing happens in a monthly batch
Invoicing everything on the 30th is convenient for whoever does the invoicing and expensive for the company. Work delivered on 2 March waits twenty-eight days for an invoice, and only then does the payment term start counting. The fix does not require invoicing every single day: invoicing weekly is enough, and it cuts the average delay from fifteen days to three.
Because information nobody collected at the right time is missing
The purchase-order number the client requires, the correct billing address, the cost centre. These are details that take thirty seconds to get at the point of order, and cost a week to chase at month end.
How to start invoicing on the day
- Write down, explicitly, which fact triggers issuing each type of invoice.
- Collect billing details when the order is placed, not when the invoice is issued.
- Move from monthly to weekly invoicing, on a fixed day.
- Assign responsibility to a named person, not a vague function.
- At month-end close, confirm everything delivered was invoiced — it is the first task of month-end close.
Check your own case
- You can say how many days, on average, separate delivery from issuing the invoice.
- No invoice last month went out later than the fifth business day after delivery.
- There is a named person responsible for issuing each type of invoice.
- Client billing details are collected before the work starts.
- At the end of each month, someone checks whether any delivery was left unbilled.
Two or more failures mean the invoicing delay is not a one-off month: it is how the company operates.
Frequently asked questions
Doesn't invoicing sooner bother the client?
Invoicing on the delivery date is the normal, expected practice. What bothers clients is receiving, in April, an invoice for February's work that nobody remembers approving — because it forces someone on the client's side to go and check, and that is where disputes are born.
What if the client only accepts invoices once a month?
That happens with large clients who have fixed receiving windows. In that case, the issuing date is a negotiated term and should be written into the contract — it stops being an internal delay and becomes a known commercial condition, which then goes into the cash flow forecast as such.
Does invoicing sooner mean paying VAT sooner?
It brings forward when the tax becomes chargeable for that period, yes. But VAT becomes due at delivery, not at issuance: delaying the invoice does not legitimately delay the tax — it only delays getting paid. The cash-flow effect is negative at both ends.
In summary
Invoicing late is the most expensive management decision nobody makes on purpose. It costs interest, it costs collection margin, it distorts the month's numbers, and in many cases it breaches the Article 36 deadline. Moving from monthly to weekly invoicing fixes most of it, and does not require a single new hire.