The average small business in the United States is dealing with $84,000 in unpaid invoices, which suggests you have to do more than just issue an invoice if you want to maintain consistent cash flow. Improve your invoicing process and get paid on time with these four proven strategies.
For customers to pay before the due date, invoices have to show up as soon as products have been delivered or services have been performed. Waiting too long to create invoices can confuse customers, especially if they’ve budgeted for specific expenses for a given period of time. When your invoices show up late, a payment could get pushed off for weeks or even months, which can disrupt your cash flow and prevent you from paying your own bills. If you typically collect advanced payments or down payments, issuing late invoices delays project start dates and makes your business appear unprofessional.
Send detailed invoices.
Each invoice should include all the details about an order or project, including itemized charges and payment terms. When working with corporate clients, include any additional information they request. Some companies ask for invoices to be formatted in specific ways to match their records and facilitate faster processing.
Make sure the recipient’s information is correct as well. If you’re mailing the invoice, send it to the attention of the appropriate person or department. For electronic invoices, clarify whether you should use your client’s direct email address, or send the documents to a contact in accounting.
Make payments easy.
Payments are faster when clients can pay with the methods they feel most comfortable with. Those who rarely ever write checks, for example, will have to go out of their way to pay you if you don’t accept anything else. Expand into online payments using a trusted payment processing platform with the option to accept electronic invoices online. Customers are less likely to procrastinate when paying is as easy as clicking a button or a link on the invoice.
Don’t neglect the follow-up.
Once you create invoices and send them, it’s easy to lose track of due dates. Invoicing software provides tracking information to show you who has paid and who hasn’t and gives you the option of sending either manual or automatic payment reminders. Automating the process helps you stay on top of all outstanding invoices no matter how busy you are.
However, it might be better to reach out with a direct email or phone call if one of your best clients is suddenly late with a payment. This could be an indication of a change in financial circumstances and making a personal connection gives you the chance to work out a temporary adjustment in payment terms to accommodate the client’s needs.
Implementing a better invoicing process prompts more on-time payments to keep cash flow steady. Apply these techniques to your invoices, monitor the results, and fine-tune your approach to start getting the money you need on time from every customer.