When you’re a business owner, there are few things more frustrating than waiting for late payments to arrive from your customers – particularly when those customers fail to pay up their invoices on time month, after month. Late payments not only leave you with extra problems to think about, but they can have a negative impact on your cash flow. On top of that, chasing up that all-important cash drains your valuable time, meaning less time spent on the other crucial aspects of your business.
Since maintaining healthy finances is what running a successful business is all about – you can’t afford to keep wasting time and resources on those clients that simply don’t pay according to schedule. So how exactly can you make a change to your current invoicing system that might encourage faster payments and less anxiety at the end of the month? We’ve put together a few tips that might help.
1. Ignore Snail Mail
First and foremost, if you’re still using traditional mail as a way to get your invoices out to customers, then you’re making a serious mistake. Almost everyone today has email – and sending a quick message over the internet is much faster than waiting for a letter to be picked up and delivered by your local postal service.
With snail mail, you’re not only waiting on the time it takes for your invoice to reach your customer in the first place – but you’re also increasing the chances that the piece of paper you send will be thrown in the trash by accident, or placed in a drawer and forgotten about. With cloud accounting software, it’s possible to email invoices directly after they’re created – meaning there’s no waiting around.
2. Be Clear on Payment Terms
Most invoices contain some form of payment advice that suggests customers should use a certain service when making payment. Usually, it’s much more effective to offer the option of an instant payment method, than to accept checks from your consumers. After all, checks take time to clear, can easily bounce, and can even get lost in the mail.
If you prefer electronic payment, let your customers know instantly by writing it on the invoice where the information can’t be overlooked or ignored. If it helps, repeat your preferences in the email copy that you send along with the invoice itself. The more you outline your payment methods, the more your customer is likely to consider your requests seriously.
3. Send Online Invoices
If you want to seriously enhance your chances of receiving payment the moment your customers receive an invoice, then use online invoices instead of simply documents. With an online invoice – such as those used by cloud accounting services like Xero, there’s the possibility to place a link where customers can click through to a transfer immediately.
Sometimes, simply the fact that paying the invoice immediately is so quick and straightforward will be enough to convince your customer that it’s not worth putting the action off for longer than they need to.
4. Don’t Leave Space for Queries
Make sure that each invoice you send is complete with all of the documentation and information your customer is going to need to happily and confidently make payment. If you don’t include all of the required data your customer might want, then they could use this as an excuse to delay their payment even further.
In other words, attach any documents or outlines explaining the payment and prices alongside the email – particularly if you know you’re dealing with a difficult client.
5. Double-Check the Due Date
Regardless of what business you’re in, the chances are you’ll find that there is some existing information online about the generally used due date for most people in your niche. Researching this will help you to ensure you’re on the same path as your competitors. If everyone else asks for payment within fourteen days, don’t allow your customers to pay you “by the end of the month.”
Set a default due date for payment and make sure that you stick to it over time. If your customer gets used to the pattern of payments that you expect, they’ll be less likely to forget an invoice.
6. Be Quick with Invoicing
Finally, the quicker you send your invoice to your client, the quicker you’ll receive the payment that you deserve. Make sure that you send everything your customer needs the moment you’ve finished working on their project, rather than waiting until the end of the week, or month.
Using cloud accounting software can make quick invoicing somewhat easier, as it means you can send the documents instantly- regardless of where you are.