8 Amazing Tricks to Get the Most Out Of Your Invoices

Invoices can often be hard—there’s no way around that. For many small business owners, it isn’t the act of creating invoices that causes so many problems.

Instead, it’s the doubt over whether the right details were included because, of course, the invoice payment is coming late. Again.

It’s in fact quite average for businesses, especially small businesses, to be paid late on their invoices. In fact, according to one UK survey, small businesses have to wait 72 days on average for their invoices to get paid.

That is a long time to wait. That kind of delay means that your cash flow is being negatively impacted. And that in turn means that you won’t be able to meet your financial goals.

Business invoicing

That’s why you need these 8 amazing (and simple) tricks to help you get the most out of your invoices.

Make thorough, strategic policies

Before you’ve even signed your first contract or agreed to your first job, you should have created your payment policies. This is an important document that will help save you and your client from a whole heap of misunderstanding.

Effective, strategic policies will help you and your client come to a mutual understanding by writing down, in general, what are expected from both sides in terms of payment.

Of course, you can adjust these policies later on, and in fact you definitely should, seeing as your business will be changing too.

In your strategic policies, you should include the following:

  • whether payment should be made upfront
  • how long your client will be allowed to pay the invoice
  • whether there’ll be any late fees, and if they’ll be a flat rate or a percentage
  • the types of payments you’ll accept, including bank transfer, debit/credit, PayPal, cash only, etc.
  • whether your products or services will be delivered before or after the payment has been received

When you get these policies sorted out, you’ll have a much better understanding with your client.

Make your quotation beforehand

Having those policies is great, definitely, but they are nonetheless general and speak to all cases. However, you still need a document to cover you in specific cases. That’s why you should be creating a detailed quotation before you accept any job.

Your quotation should be able to answer the following:

  • What are your and your client’s expectations?
  • How long do you have to complete the job or deliver the products?
  • What exactly is the extent of the services you’re providing?

When you answer these questions, in detail, and you get your client to sign off on them before you begin your work, you are saving yourself a lot of trouble.

You and your client will have a reference document to look back on in case any problem or confusion arises. Therefore, you can save yourself a lot of trouble later on.

Automate, automate, automate

The defining character of a successful small business in the modern age is the ability to automate and grow intelligently.

The ability to find the appropriate tools to help you do the more mundane tasks will help your business grow in leaps and bounds. This is because you’ll then have more time and energy to focus on your core business tasks.

Automation works for invoices too. Although many small business owners love using Word and Excel invoice templates, which are great for making invoicing faster, there is an even better option.

Online invoicing software can help you automate your invoicing processes to send out professional invoices faster. Since all the information is saved on the cloud, you can do invoicing on the go in a short amount of time.

Business invoices
photo credit: ClearFrost / Flickr

Send out invoices immediately

This is a major, effective strategy: send out your invoices on time. Many small business owners recognize the importance of this advice; however, they just don’t follow it.

The reason for their not following it is usually related to being busy or tired. However, when it comes to your company’s finances, there really is no excuse for that.

You should be set on sending out your invoices as soon as possible, possibly at the same time when you deliver your service or send your goods.

An even better choice would be to start your invoices while you’re still working on the job. You can fill in the general details and then just add in the specifics when you know them. That will make your invoicing much faster, especially if you’re not using invoicing software.

Use clear language with the necessary details

While the invoice is a legally-binding document (that is, after both parties have agreed to it), it doesn’t mean that you’re required to use obfuscating language throughout.

One of the most common reasons that invoices are held up in a client’s accounts payable processes is due to the fact that there is a challenge on the invoice. This is normally because the invoice contains wrong information or doesn’t contain the necessary, correct information.

When accounts payable challenges this invoice, they simply just send it to the back of the pile and take a look at their next invoice. This will mean that your invoices are not going to get paid on time, which will put a serious dent in your cash flow.

In order to avoid that, you need to make sure you’ve including all the necessary details in plain and simple English (or whatever language you’ll be invoicing in).

Include late fees

This may be uncomfortable for some, but it is very important that you include late fees on your invoices. This type of strategy will help keep you and your client timely and accountable.

For the client, you should add an extra charge for any payments that come after the due date This charge can be a flat rate applied the same to all invoices, or it can be a percentage of the original invoice amount.

It is important to remember, however, that the standard 30-day invoice is not the most effective. This is because most clients tend to be late 2 weeks on average.

In fact, it would be better to set your due date for 15 days. This way, even if the clients are late to pay by 2 weeks, it will still fall within the 30-day window.

Email inbox

Send polite email reminders

It really is an inconvenience for business owners to have to chase after their clients in order to get the money they are owed.

It is in many cases unfair, and the previous 6 tips should help you alleviate that problem.

However, it will still happen, and how you respond when it happens can help change the outcome.

You should be proactive. You should send out polite email reminders to your clients on the day that their invoices are due.

Here, the word polite is absolutely crucial. Studies have shown that by simply using the words “please” and “thank you,” you can get your invoices paid faster.

Make a phone call

When your polite emails aren’t answered, it’s time for an old-school trick: make a phone call.

Even though emails are less intrusive, you want to get answers more quickly which can most effectively be done with a phone call.

No matter what medium you are using to communicate, you will still need to be polite in your efforts. With a phone call, which implies an actual, live conversation, there’ll be less room for your client to avoid payment.

That means that you’ll be more likely to have your invoices paid.

All of these tips are great and amazing for having your invoices paid when you need it. By following these tricks and steps, you’ll find yourself with better cash flow and more opportunity to help your business grow.