If you are reading this, you are one of hundreds of thousands, perhaps millions of people who have to face the issues of clients not paying on time. While a good business relation includes experiencing delayed payments, that doesn’t mean you have to live with it.
Delayed payments on your invoices can harm you significantly, especially if you are small or medium sized business. Payments are after all your cash flow and you cannot afford to have it disrupted like large corporations as they have a larger reserve and multiple clients to compensate for any delays.
As a smaller venture, you cannot have the luxury of invoices paid late. That being said, here are 10 tips from our experts on how to ensure you get your invoices cleared faster.
1. Agree Terms in Advance
Whenever handling a new client, always have a detailed sitting on the invoicing terms and conditions before accepting an order. Let them know what your limitations are and what you expect them to abide by. Clearing up any confusion in the start will not only help in getting the invoices cleared faster, but build a reputation between you two.
2. Upfront Payment
Use a prepaid business model. When you have settled with all the details of the order with your client, tell them that you will be sending them the invoice ASAP and that the order will be executed upon receiving the amount. Yes, there will be clients that will not agree to this, especially new ones. Make sure to bolster on your reputation to convince them. Testimonials from previous clients and a well-built portfolio goes a long way.
If you struggle with a complete upfront payment on your invoice, you can always ask for a partial advance as a gesture of commitment.
3. KISS: Keep Invoices Short and Simple
According to an American research firm, many businesspersons receive more than a 100 emails a day. Having long and complex invoices will only tire the recipient and will probably decide to check it in detail later on. As more emails keep coming in, your invoice will be most likely buried beneath, forgotten until you send a reminder. By the time your invoice is dug out and processed, you will be already in a tight situation.
Keep the invoices easy to read. Make a summary at the start stating your amount. Details are for the accounting and auditing department to verify.
4. The Right Person
Make sure you are sending the invoice to the right person. The CEO or a higher management level can get the gears moving, but that also runs the risk of it being lost in the many mails they get. Agree with the party in advance on the focal person to clear the invoices and then email to that particular person.
You make keep any other senior manager in the loop by CC’ing them a copy too.
5. Shorter Time Frames
Try to negotiate a shorter interval between two payments. If you believe you can easily do with a monthly payment schedule, try to go for a biweekly. You will be on the safe side if there are any delays in the processing.
6. Align Payment Cycles
If you are going to have a long term client with regular invoicing and payments, try to ask them for their payment cycles. If they make payments in the middle of the month, you can send them an invoice before the 15th to make sure it is received and the gets in the processing. A mismanagement of time will cost you dearly as sending an invoice after they have done their payment rounds means you will have to wait till the next time.
7. Payment Options
The age old saying of the world becoming a global village is true. Borderless, you will be face issues when your accepted payment methods will not be supported by the client. Bank transfers and PayPal are good, but try expanding your options. Alternate payment processors, micro banking and cryptocurrencies are very attractive these days and should be a part of your accepted methods.
You can connect this with the very first tip for total or partial upfront payment against your advance invoicing. You can offer discounts if the advance payment can be significant in value. This can not only foster a relationship, but also help your clients lower their expenses and give your cash flows the boost you need.
9. Invest in an Invoicing Software
Automation is key in the modern world. While you will spend time to create, verify and send out an invoice, a dedicated software like an invoice generator would be able to do this in a fraction of the time. It’s not just the time you save, but that time could be spent doing more constructive work for your business.
Invoicing software are a great tool as many can be connected with an email to automatically send out the invoice so you don’t even have to worry about it. The software will also have some nifty reporting tools such as keeping track on payments received and even helping you in having a comprehensive record for your tax filings.
10. Friendly Reminders
No matter how much we rely on tools and technologies, we are humans in the end. Delays in invoice payments are an inevitable part of any business. Always keep a smile and send friendly reminders if the due date has passed.
If the client still repeatedly clears you invoices late on a regular basis, it is about time you should consider renegotiating the payment terms or closing the deal in the friendliest of atmosphere.
In the end, it’s all about how you handle the situations. Payment release may not be in your hand, but making invoices paid faster can certainly be.