Try out these tried and tested techniques, highlighted by Xero, to get your invoices paid faster
1) Invoice straight away
So many business owners we meet say they haven’t got time to send invoices. You need to send invoices to get paid; like it or not it’s what you’re in business for
Don’t make setting up and sending invoices an arduous process. In these days of user-friendly cloud-based accountancy software you can send invoices from your phone; on the move.
Remember clients are more open to paying bills when they've just received the goods or services that you delivered. Cash in on the goodwill.
2) Send clean invoices
Is there any ambiguity, misinformation (or wrong information) on your invoice? Remove it! Take away any potential blocks to your client paying up.
Details on your invoice should include description of the work or product, the date it was delivered, and any client requirements (such as a purchase order number).
Some clients have very specific requirements so ask what they need to see on the invoice. Could you ascertain this information prior to you doing the work?
Make the due date clear, too.
3) Ask for prompt payment
You are not a bank; you don’t need to give credit.
More than a third of businesses now request payment within a week. Consider doing the same. Your client may want to negotiate for more time – and you should try to be flexible – but starting off at seven days will help set an expectation of prompt payment.
4) Make on-time payment worthwhile
How clear are the terms and conditions on your invoice? Putting thought into how you operate this policy pays dividends. You operate from a position of strength.
Have you considered charging fees for late payment? If you charge include a line something like: “Late fees are assessed after the due date, at the rate of 1.5 percent per month.”
A more positive approach is to offer a discount for prompt payment. The lure of saving money is a powerful motivator, even if it’s just a few percent discount it gives you, or your credit control person/department an extra chase date.
5) Be easy to pay
Customers will pay faster if they can use their preferred method. Offer them a variety of options.
Be aware that some customers would like to pay using credit card or an automated clearing house (like PayPal). Could you set up an iZettle card reader to take credit card payments?
Our research shows you'll get paid 20 days sooner if you offer these options. Learn more about online payment services.
If you are shepherding your clients towards paying via bank electronic transfer, then make sure you include your business bank account number and sort code number on the invoice.
6) Chase payments
Have you got a credit control process?
You'll need to follow up with the client to make sure it's being processed. Online invoicing makes this a lot simpler.
When you send online invoices, you can see when it's been opened and when it's been paid. If the due date is approaching and it hasn't been paid, send a reminder. You can set your software up so that the reminder email is sent automatically. If the invoice goes past due, it's time to make a phone call.
Remember there are several legitimate reasons why an invoice doesn’t get paid. Don’t always think the worst. Try and establish what the reason is and then maintain communication with your client. This really helps with your cashflow planning.