Follow these top tips to get your invoices paid faster
You have put hours of work into your providing your service or selling your product. You have sent the invoices to your clients…. but instead of payments all rolling in on due date, things just aren’t happening…
1. Be Specific
Being specific is key to reducing time spent both answering queries from clients, and getting invoices paid. Make sure you include as much detail about the service or product provided. Use the columns available include quantity/hours. Ask yourself…. Is it clear? are the services/ products provided understandable.
For Example: If Sarah runs a Virtual Assistant Business and she completes some social media work and some website updates for James, what does her invoice need to include?
2. Include Payment Details
You need to make it as easy as possible for your customers to make payment. Include all the payment options you offer Paypal, Bank Account, Creditcard/EFTPOS. Also make sure you include the account details to actually make the payment. No point saying customers can pay by Bank deposit if you don’t put your bank account number on the invoice.
3. Include your Terms on the Invoice
The main one is your due date…. this is essential as many businesses will assume that payment is the 20th of the following month if you don’t state a date for payment. If there is no date how will they know it is overdue?
Other important terms to include are things like interest on overdue accounts (you should have this on your invoice even if you don’t use it often). It is amazing how quickly many people will pay if you send them an invoice for the interest on an overdue amount. So this is a key tool in your debt collection belt.
Also, many businesses offer a prompt payment discount if payed early (either before due date or within x days from invoice). This is a good positive way to encourage early payment of your invoices. It only needs to be a small amount say 5%.
4. Be Regular
Create a system that works for you and stick to it… (if you don’t have time, pay someone to do it). By this I mean choose when you are going to send your invoices? Will you send as soon as each job is completed, at the end of each week, or at the end of each month. Which option you choose is up to you, the key is sticking to it. You also need to decide if and when you will send statements? Only when payment is overdue, at the end of the month. If you don’t have the time to get your invoices sent regularly then I do recommend paying someone else to get them done for you. This is after all your income we are talking about.
5. Follow Up
This is probably the most crucial step…
You need to be persistent and consistent in your follow up. That means having a process in place for dealing with any unpaid invoices as soon as they become overdue. I recommend starting with a friendly follow-up email the day after due date, checking to see if they received the invoice and if there were any problems that explained why payment had not yet been made. Nine times out of ten the person will have either misplaced the invoice or simply forgotten to make payment.
From there you need to establish a process of regular contact both via email and phone. Make notes of conversations and note down dates of expected payment. Sometimes it could be an idea to offer a payment plan. If nothing seems to be working interest can be added and further steps taken.
The biggest key to keeping control of your debtors and avoiding huge amounts of overdue invoices is getting a process sorted and sticking to it regularly. If it is something you don’t have the time for, or don’t want the hassle, then outsource. There are bookkeepers (like me), accountants, and virtual assistants that would be happy to help with this.