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In an ideal world, all invoices would be paid on time, every time. Yet it’s all too common to get bogged down in the paperwork, and simple errors lead to costly delays. Don’t get stuck in the cycle of chasing late invoices – here are a few of our top invoicing tips to help you get paid sooner.
1. Make payment terms very clear.
One of the most important small business tips for processing invoices is to put your due date at the top. This gives a clear visual reminder to clients, eliminating any confusion over payment terms. You can negotiate terms at the start of a sales contract or set your own payment term. Either way, it’s important to make this clear before delivering goods and services so that your clients know what to expect. For project-based services, a written estimate or quote can help clients budget. Common time frames include 14 days, Net 30, Net 60, or End of Month (EOM). If you need a quick boost to your cash flow, you might even make payment due upon receipt of invoice.
2. Accept a variety of payment methods.
Methods are just as important as terms when it comes to billing and invoicing tips. If you only accept cash on delivery, you’ll alienate clients who might prefer to pay by bank transfer or with a company credit card. One of the best ways to encourage a fast, timely payment is by offering a variety of different payment methods. These should be clearly marked on your invoice, ideally with an embedded payment link allowing customers to pay with a single click. Today’s payment processors make this easy and automatic.
3. Keep open lines of communication with clients.
In a world of automated services, a little old-fashioned communication goes a long way. Sending a personalised thank you message after payment builds loyalty and trust with great customer service. You can set up automatic email reminders, but don’t forget the importance of simply picking up the phone from time to time. The need for great communication is also applicable during the delivery of your products or services. Keep clients informed of delays and progress as needed, and they’ll hopefully return the favour when time comes for payment.
4. Offer discounts for early payment.
Some businesses charge a fee for late payments, but why not try the carrot instead of the stick? Even if you choose delayed payment terms like Net 45 or Net 60, you could offer a percentage off the invoice total if the customer makes an early payment. As with our other chasing invoices tips, if you choose this tactic, it’s important to give advance notice. Discuss all payment terms – including discounts and penalties – as part of your upfront negotiation.
5. Automate payment collection.
Finally, consider using automated software for your invoicing and billing processes. The invoice-to-payment cycle can be long and complicated when completed manually. With high volumes of paperwork comes greater potential for human error, and with error comes delay. Use invoicing software like Xero,Sage 50cloud and Invoiced that let you take control of the payments process automatically. Look for features including automated reconciliation and recurring invoicing to keep on top of accounts receivable. You’ll be able to ensure invoices go out to the correct recipient on time, with fast and easy management from a central dashboard.
GoCardless can help by integrating with accounting and invoicing software like those mentioned above, as well as hundreds of other partners. We take the guesswork out of payment timings and amounts by using Direct Debit to pull invoice payment directly from customer bank accounts on the day it’s due. This eliminates awkward conversations with late-paying customers, for improved satisfaction and cash flow all at once.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.