Karolina Seta, 2021-06-23
As an entrepreneur, you surely realize the importance of keeping your business organized and how unpaid invoices can negatively affect it. Timely payments help in maintaining the steady cash flow and streamlining accounting in your company. But what if your clients are in arrears with the payment? There are many convenient ways to deal with late payments!
Below we’ve outlined the most important steps to help you streamline your invoice payments. You will find those which will help establish the right routines to collect payments faster as well as more radical solutions that relate directly to the customer and urge them when necessary.
By making invoicing a priority to you, it will also become a priority to your clients! Get in the habit of issuing documents and sending them to the client immediately - submit your invoice right after you have finished a project.
Don’t waste your time and don’t put off your work for later - the sooner a customer receives an invoice, the sooner you will get paid. In addition, by still having the information that should be included on the invoice fresh in your mind, you’ll make fewer mistakes on it, which will also streamline the payment process.
However, if you happen to send a long-overdue invoices, it's a good idea to send a short note along with it apologizing for the delay. Also, make sure that the invoice contains all the necessary information (as contact details or details of the goods purchased), so that your customer can associate exactly what and who they are paying for.
There is some important information to consider when creating invoices – you should take into account the entirety of the document. Creating a professional-looking invoice will surely attract the attention of your customers, but looks aren’t everything.
Not finding the necessary information on the invoice is one of the reasons for customers to procrastinate payments. The clarity and readability of your invoices is a key part of the entire invoicing process!
Invoices must be informative – you should include the details such as the company name, a description of the goods sold, their quantity and prices, as well as the total cost. You cannot forget about the due date, payment terms and information about payment options. Additionally, it is worth including contact details on the invoice so the client can easily reach out to you if necessary.
Simplify the language on your invoice - not every client needs to know what ‘net 30’ means. Instead, it is worth using, for example, the phrase ‘due in 30 days’. If your invoices are incomprehensible and your customers are confused reading them, it can slow down a payment significantly.
Prevent billing misunderstandings! Provide your clients with documentation detailing the invoicing policies of your company - it is worth including such information in the contract, in verbal conversations and certainly on the invoice itself.
Your clients should be fully aware of all terms regarding the payment - due date is key here! They also must be informed up front which additional fees may be charged for late payment.
By stating your company’s invoicing policies top-down and including all necessary information on the invoice, customers will not be confused when you send them the document and can easily move on to the billing process.
There are many payment methods that you can make available for your clients. Include information about what payment methods you accept in terms and conditions of your invoice, so that your customers know exactly how they can pay you.
Different people use and like different payment methods. Make it easy for your clients to access the options that are most convenient for them, making the entire invoicing process easier and getting faster payments! Whether it’s by credit card, cash or online payments - your customers will definitely appreciate the variety of choice.
These days, online bookkeeping is so well-developed that it is already beginning to outgrow traditional paperwork. This translates into customers being willing to make faster payments if they have the opportunity to do so online.
Therefore, these days, it is worth providing users with access to electronic invoices – not only they will benefit, but you as well. Thanks to them, you will never lose your documents and will have access to them anywhere and anytime, as long as you have access to the Internet.
With an online invoicing system, you can choose among multiple invoice templates to adjust to your client’s different needs, create invoices in less than one minute, and store both your and your customer’s data, so you don’t make mistakes when re-entering them.
Connecting your account with a payment service and adding a "Pay Online" button is another huge advantage. It will take your customers straight to the payment type that is convenient for them and, as a result, help them to pay in minutes.
Learn more about invoicing software and how to choose the best one.
As a small business owner, you can send the same invoices to the same clients from time to time or manage a subscription business. Instead of spending precious time on repetitive tasks, automate this process and take advantage of recurring invoices.
Example of recurring invoices in InvoiceOcean
Billing your customers consistently results in them doing the same for you. By sending invoices regularly to your clients on specific days/hours, they will know exactly when to expect them and pay them right away. They will also be able to respond with automated recurring payments so there are no late fees.
Small business owners also have their own expenses and can sometimes fall behind on payments just through their own money flow.
A good idea to prevent delayed payments can be sending partial invoices instead of one large one and offering your clients the option to pay in installments. Breaking up big payments into smaller ones and asking your clients to pay smaller amounts, but more often, will ensure the whole payment.
This is especially useful for large, long-term projects. By delivering more invoices, customers get more payment reminders, which increases the chances that they will remember to pay all arrears.
A pay-first policy might also be the solution! Request your customers to pay before you do anything for them. It will ensure that you are not working in vain – even part of the whole amount is better than not getting paid at all.
It does not have to be the full amount at once - small prepayments or depostis, even in the amount of a few percent of the total payment, will suffice. If the customer has already paid a bit, they are more likely to pay the whole thing because they don’t want to lose the money they already invested.
Payments in advance are good for the overall cash flow of your company. This will also get your customers used to remembering that they always have to pay for the services provided.
An invoicing software, such as InvoiceOcean, can make it easier for you to issue prepayment invoices and send them to your clients in seconds!
Creating prepayment invoice in InvoiceOcean
Both in the case of advances and payments in installments, it is worth including information about the conditions regarding those payments also on the invoice itself, so as to avoid any misunderstandings related to both these and further settlements.
People love to save money and nothing will encourage your customers to pay like discounts! By offering discounts for people who pay their invoices faster, you will gain the trust of your customers and it will seem that you appreciate their commitment.
Discounts don’t have to be huge. All you have to do is offer a few percent less of the total amount if the customer pays in half the time of the designated due date, for example. This will get your clients into the habit of paying early.
However, consider whether you can afford to grant discounts left and right. Sometimes it makes sense to use the so-called retainer model and appreciate proven, trusted customers, and sometimes it may be better to give discounts only to those who disrupt your cash flow by continuous delays in payment. Be careful – by offering the same deal to everyone, it may lose its value and customers may start seeing it as a ploy.
Instead of just delivering a service and asking to pay for it, add an emotional layer to your work with clients. Conduct regular calls and write emails with updates to keep your clients in the loop. Create a friendly environment for your clients so that they can rely on you and reach out whenever necessary. This way, they won't treat you as another vendor, but rather as a friend.
After all, it's your customers affecting the development of your business! If you only require them to pay, they may not feel the right bond with you and may only associate you with ‘some invoice’, making them reluctant to pay promptly.
Tired of late fees and chasing clients for payments? Send them reminders about unpaid invoices! All it takes is a short, even one-sentence message sent to the customer to remind them of their due payments.
Start with a friendly message and, over time, if you don't receive a payment, send a more serious one. Sometimes it happens that a client loses an invoice and will be appreciate a reminder. By sending one, you will come off as a professional.
You can send reminders by emails, but these can often be ignored. Calling your client is also a good idea, but it is time-consuming. Sending automated messages with invoicing software is a better solution. With them, all is automated for you and you don't have to spend time on reminding clients about due dates at all.
In the system, you will quickly set the schedule to send notifications and pre-made reminder messages – you don’t have to write them manually.
Reminder message in InvoiceOcean
Have you already sent many reminders about unpaid invoices? Have you clearly stated payment terms and clients ignore them? Still haven’t received payments? This is the moment when you have to impose additional fees on your client.
Customers often forget about payment deadlines and for you, it may mean long weeks or even months of struggling to get paid. Don’t be afraid to implement additional charges on your clients, but they can’t come as a surprise – when sending them invoices, immediately inform your clients of the late payment penalty.
This can be a fixed amount or some percentage from the initial payment (usually not more than 1,5% on top of your invoice if paid late).
Customers may be dissatisfied with the overpayments imposed, but if you don’t want to lose out on your business, you need to claim your money!
We can all agree that everyone would rather skip chasing customers and their late payments. Unfortunately, when running a business, you have to reckon with the fact that you can never avoid it.
However, it is the payment for invoices that affects the total turnover of your business, and thus its overall growth. So don’t be afraid to ask and demand from your clients the payment for services rendered to them. If they don’t respect your rules and are repeatedly late with the payment, it is worth re-evaluating the relationship with such a customer. Sometimes it is sufficient to talk to them and just nudge them and sometimes you should consider whether to continue the cooperation with such clients at all.
Don’t wait until the payment is overdue. Send the reminders before the due date. Don’t be afraid to consult with your accountant on how to streamline payment process and ways of reminding your clients about unpaid bills. You can always use tools that will automatically send reminders to them so that you can focus on other activities of your business.
Tracking down late payments is not the most pleasant part of the company's management, but it is essential for getting the job done. Your business bottom line is what you should care about – after all, every business relies on a steady flow of money. So never postpone invoicing for later, it will result in later payments!
Set clear rules for paying invoices, act professionally and don’t be afraid to send multiple reminders to your clients - it all adds up to solving the problem and getting paid faster.
Consider automating your payment and invoicing process using invoicing software, like InvoiceOcean, and save your valuable time for other business activities.
Precise accounting = precise managing of the whole business, so fight for your money and take control of maintaining a steady cash flow!
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Freight Industry in the US needs Better Invoicing Standards
Invoicing is a process that takes some effort and standardization in order for companies to function effectively for the long term. It is good to stick with one standard in terms of what is expected on an invoice, the payment to be delivered by the due date, and for companies to be able to follow their invoices (knowing which were paid and when for instance) for the long term with their clients.
Mike Lata (aka Maciej Duraj)
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