You'd think that in today's digital age, it'd be a lot easier to get paid. While projects are now easier to find, getting payments -- not so much.
In fact, late payments cost small business owners a whopping $3 trillion annually. Needless to say, late paying customers cause several hardships in small and medium businesses.
This includes the inability to pay employee bonuses and some even struggle to pay their staff.
If you're looking run an efficient business that gets paid on time, then you need to enhance your invoice tracking process.
Let's take a look at some of the ways you can pull this off.
1. Switch to Cloud-Based Invoicing
There are tools like invoicely that simplify the invoicing process. You can use this to create customer bills using templates.
Plus, you can customize them with your logo and contact details to speed up the invoicing process. Of course, you're also able to save the contact information of your clients so you can insert it into the bill quickly.
It's no wonder why 67% of accountants prefer cloud-based tools. If finance professionals are using it, then this proves the value such software holds.
And what's best of all is that it's entirely online. As long as you have an internet connection, you can view, create, and send invoices using your desktop or mobile device.
2. Automate Your Payment Reminders
Another benefit of using cloud-based invoicing is that you can set up payment reminders. These will automatically send to the recipient at the intervals you set.
For example, you can have it sent weekly until it's paid.
This saves you from having to fetch the details of the invoice and send a personalized email to the client. In other words, you can continue focusing on producing for your business.
Chasing down clients is one of the biggest productivity killers in business.
3. Set Your Payment Terms from the Start
Don't expect clients to read your mind about your payment policies. You need to educate them about your payment terms upfront, before providing your product or service.
Every company has its own policies so include these details in your onboarding process. For example, you can provide a document that covers when invoices are sent, when they're due, and what forms of payment you accept.
Then you can take it a bit further with a contract. In here, you can include the scope of the work, whether you bill hourly or by the project, your fees and additional fees, and any late fees you tack on if payments are late.
You'll also have to set up whether you want your payment cycle to be on a Net 0, Net 10, Net 15, Net 30, or another timeframe.
Laying this out at the forefront will make it easier to collect your dues once the time comes.
4. Give Each Customer Flexibility and Options
In business, it's good to be stern about your policies and processes. It can help to deter problems with clients. But eventually, this will turn into a road bock.
You may one day come across a customer that can't comply with your policies for whatever reasons. For example, maybe their accounting department is on a Net 30 cycle and won't be able to meet your Net 7 demand.
Allowing your customers some room for flexibility is key to maintaining a happy client base (which can boost retention rates).
At the start of your meeting with a new client (after agreeing to work together), you can ask them how and when they'd like to pay invoices.
This will open up a discussion for negotiation. Also, by allowing them to choose will make them accountable for paying on time. Plus, it takes the guesswork out of the whole payment process.
5. Invoice Clients Upfront
This is an excellent idea if you're in an industry that's at a high-risk for non-payment, such as in the B2C sector. For instance, e-commerce companies charge upfront before shipping a product.
You can do the same, but you'll need to do so with caution. If you're in a field that has a high chance of the customer getting burned, then this may not appeal to prospects.
Now, there are ways around this hurdle. For example, you can ask for a percentage upfront instead of the entire bill.
Some companies charge 50% upfront, while others will ask for 25%. It depends on the amount of the full project -- the higher it is, the lower the percentage should be.
Another option is to bill your client by the milestone. You can either chop up the invoices to match each milestone so you can charge after the completion of each.
Or you can bill in advance per milestone. Again, it's good to be flexible and communicate with your clients so they can play a part in determining how the invoicing will play out.
6. Make Your Invoices Simple to Understand
Here's where the cloud-based invoicing platform comes in handy again. You won't have to worry about doing a botched job on your invoices because they come with professional templates.
It comes with all of the necessary fields so you can quickly fill it out. When your clients receive them, they'll know exactly who you are, what they're paying for, and how much they have to pay.
However, if you insist on creating your own invoice, then you'll need to include the following:
- Invoice number
- Order number
- Your business name and contact info
- Client's name and contact info
- Itemized list of products/services and rates
- Description for each product/service
- Due date
- Date of invoice
- Payment options
- Extra costs/fees
It's essential to display this info in a legible and easy to scan way so they can find the details they need quickly.
7. Accept Digital Payments
Most of today's businesses are operating virtually. This includes paying their contractors and vendors using various online payment platforms.
If you don't have an account with multiple payment portals, then you'll find it challenging to meet this demand.
With an online invoicing tool, you can overcome this obstacle. Platforms like invoicely allow you to accept payments via PayPal, Stripe, Mollie, and WePay.
Plus, you're able to process credit and debit card payments (without the need to collect this sensitive data). This safeguards your business and your clients by using portals that are secure and non-invasive.
The more payment options you accept, the easier it'll be to get invoices paid promptly.
8. Set Up a Payment Plan
If you're in a market that sells products and services at a high price, then payment plans are ideal. This will make it easier for your clients to pay off your invoices on time.
Rather than demanding 100% of the payment, you can split the fees over the course of three or four months. Then to make it easier for both parties, you can set up automated payments, where you deduct the funds from their account each month.
This is a win-win -- you get paid on time, and your clients don't have to deal with the hassle of processing invoices.
9. Give Incentives to Clients Who pay Early
Getting paid on time is easier said and done. There are many reasons why late payments occur. But to help deter them from happening, you can offer an incentive to clients who pay before the due date.
This ensures you get your invoices paid fast and your clients get a bargain as well. In some cases, this may come in the form of discount, freebie, or other exclusive deal.
Then, on the contrary, you can consider penalizing clients who don't pay on time. You can do this with a one-time late fee or one that accumulates over time.
Just be sure to include this in your payment terms agreement and have all parties sign it.
10. Include Branding in Your Invoices
Some companies believe that including your logo on your invoice will increase the chances of it being paid on time. This may be because the client can quickly identify it.
You can brand your invoice by implementing the colors and logo of your company.
Besides getting paid sooner, branding can also help clients to remember you. Then to help promote customer retention, you can include a coupon code for their next order.
Use these Tips to Get Paid On Time
With the above tips, you can improve the chances of your business being paid on time. The larger your clients, the higher the chance they'll forget about your invoice.
So don't forget to follow up with emails and use payment reminders to get paid faster.
This is easier when you integrate tools in your process that makes this easier. Invoicely is a platform used by businesses large and small.
You can speed up your invoicing process and automate it using this free tool. Sign up today to see how simple it is to send professional invoices.
Then let us know in the comments whether you feel it helps simplify your invoicing!