Startups and small businesses have a mammoth task on their hands when it comes to organisation. Invoicing systems, though important, can often fall by the wayside when all hands are on deck.
This can lead from the nuisance of a late paid invoice to the much bigger irritant of small claims courts and loss of capital. Small businesses and startups cannot afford to be dropping any income, it simply isn’t viable.
With that in mind, how can some of the top invoicing issues be combatted?
Make your invoices client friendly
This sounds simple and perhaps a little obvious, but it is a pitfall that many companies face. An invoice lacking clarity is much more likely to end up on the bottom of a clients payment pile.
Triple check that the following information is clearly stated on the invoice:
- Who you are;
- What the invoice is for;
- How much the invoice is for;
- How the client can pay.
The design of your invoice is also important. It needs to represent your brand and be well-designed. It doesn’t have to cost you a lot in design fees either. Companies like Master Proposal offer downloadable, reusable templates with simple layouts and a functional design for as little as £3.
You can also use psychology to your advantage. For example the colour blue is said to encourage trust and thus can be an excellent branding choice on your invoice. Using shades of blue on an invoice can portray trustworthiness and encourage clients to pay sooner. The social media moguls are all on board with blue, check out Twitter, Facebook, Tumblr, Vimeo and LinkedIn, who all use its various shades for their branding. Colours like orange and yellow signify success and using green for your invoice amount further symbolises money, which can sometimes ensure a quick payment.
Friendly language is just as important as friendly colours. Make sure your invoice is polite. Say please and thank you and people will be much more inclined to pay. Also, thanking them for their custom and stating you look forward to working with them again will encourage repeat business!
You will be surprised what a difference these details can make. If an invoice oozes quality and attention to detail, it is much more likely to be picked off the pile and paid off speedily.
Don’t get behind because you’re busy
It’s a jungle out there but you should never be too busy to invoice. You want your business to make money and invoicing is an intrinsic part of the process. Bigger companies with fluctuating invoice needs often outsource their paperwork so that they have one less thing to worry about. This is especially useful for companies with changing invoice requirements like phone networks whose customers often switch between paper statements and online.
This can feel like an impossible option for the small business owner or startup. Money is already tight and outsourcing is just one more unnecessary outgoing. However, if you really are too busy to keep your invoicing system in order then the money gained from having an accurate, up to date and effective invoicing system can outweigh the costs of using another company to do it.
Document creation, management and delivery experts Netsend advise that if you choose to outsource, you need to look into companies that are proficient in both physical documents (post) and online communications or e-payments. Different customers will have different preferences and will often become irate if they can’t go paper-free, or alternatively if they can’t have a physical statement for their files.
Being paid in a timely fashion can depend significantly on clients remaining happy with a service. Properly vet any company you are considering using for outsourcing in order to keep your company and your clients happy.
Communication is key
In order to avoid a backlog of invoicing you have to keep your communication clear, not only with clients but with your finance manager or accountant. Some companies may find it useful to hire an accountant to help with this issue. Having a trained professional can help with many issues including keeping detailed records of your finances. HMRC requires you to keep business and VAT records dating back 6 years, and records will be backed up correctly and safely.
It is important to keep lines of communication open so that information is not lost and client invoices are correct. Giving your clients gentle reminders a few days prior to the due date of their invoice often makes the difference to being paid on time.
Following up overdue invoices
Sadly, even the most diligent and organised companies will still not be able to convince all of their clients to pay on time. For these instances, a contingency plan needs to be in place.
But don’t leap straight into small claims courts. This can take up your valuable time, money and alienate clients. If you have exhausted your options regarding polite notices and need a stronger incentive to get a customer or client to pay you may want to use a service like UK-based Still Due.
They contact the client that owes you money and asks them to pay it within a certain timeframe. If payment is not received the service will publish the client’s debt online. It may sound threatening but it can be a preferable option to taking immediate legal action.