2 min read
What can you do when a client hasn’t paid an invoice? Tracking unpaid invoices can be a serious drain on a small business’s time and energy – not to mention the awkward conversations that go along with it. You want to protect your business relationship, but at the same time you also need to protect your business’s cash flow. Follow our small business invoicing tips below to get paid, minus the awkwardness.
1. Submit your invoices straight away
It’s best to submit your business invoice immediately after the conclusion of a project. The work you’ve completed will be fresh in your client’s mind, and it shows that you care about getting paid in a timely manner. If you take your time issuing the invoice, clients might assume that you’re in no rush to be paid, which puts your payment at the back of the queue.
It also creates some confusion, particularly if the invoice is submitted in a different accounting period to when the services were provided. Don’t wait until the end of the month or quarter to issue an invoice – do it straight away.
2. Find out who pays the bills
If you’re providing products or services to large organisations, the accounting department alone can involve a sizable workforce. It’s also common for one department to request your business services, and another department to pay invoices. The discrepancy between departments can lead to payment delays.
Find out who is in charge of payments, and submit your invoices directly to them. Your invoice might pass through multiple inboxes before it finally reaches accounts payable. You also need to have the right contact if your payment is delayed. Otherwise, you might be bothering someone who doesn’t handle payments, leading to friction in your client relationship.
3. Make sure your invoices are accurate
One of the most common reasons for a late invoice payment is that the invoice itself is incomplete or inaccurate. When you set up your small business invoicing system, ensure that it issues invoices using a clear, professional template. This should include all relevant payment information, including details like:
Relevant purchase order numbers
Project manager requesting the order
Brief description of services rendered
Date that the products or services were supplied
If you don’t include the basics, the invoice will be returned to you, which could lead to significant payment delays.
4. Automate your invoicing system
An easy way to avoid awkward conversations is to automate your small business invoicing system. Instead of writing emails to chase up on overdue invoices, why not use automatic payment reminders that are triggered at the end date of your invoice payment terms?
You can also set up regular payments for repeat clients. Take Direct Debits each month to cover the cost of goods and services, with no need to chase after unpaid invoices. It reduces processing time both on your side and the client’s end.
5. Offer multiple payment options
Increase your chances of timely payments by offering customers a number of ways to pay. The easier you make it for them, the more likely they are to pay up. In addition to accepting traditional payment methods like cheques and bank transfers, you should also consider taking payments from apps like PayPal, Apple Pay, Google Pay, and credit or debit card.
Whichever you choose, list these payment options clearly when you issue invoices. You can also embed a ‘Pay Now’ button in your email invoices to direct the recipient to a checkout page.
6. Take an upfront deposit from invoices
When late invoice payments are an ongoing problem, it might be time to get more proactive. Many small businesses require upfront deposits before they provide any work for new clients. You might institute a 50% deposit rule, ensuring you receive half of the pay before beginning the project. If a client pays the deposit, they’re more likely to also be reliable with the remaining fee. It also gives your business a positive cash flow while you wait for invoices to be paid.
Invoicing software takes most of the awkwardness out of this process. With technology, you can issue invoices and follow up with appropriate, automatic measures.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.