Get your invoices paid faster!
Late or unpaid invoices cause real issues with cash flow in small businesses. They mean you might not pay suppliers on time, you have to dip into other budgets or overdrafts to keep the lights on, you may have to spend time chasing and negotiating that could be spent on other clients (or finding new ones), and so on.
From the client’s point of view there are all sorts of reasons why they haven’t paid on time (from simple forgetfulness to wilful neglect) but the end result is the same for your company; the work is done and dusted, but now bills are due and you’re simply running out of fuel.
So how can you get those pesky invoices paid a little bit faster?
Create better invoices
The first place to look is at the invoices themselves — are they up to the job? Open them up and take a look at the following:
· Overall design — make sure your invoices actually look good, that there is nothing distracting the eye, and that all of the text is readable.
· Vital information — check that addresses, account numbers, contact details and other important information is 100% accurate.
· Payment terms — ensure that they are clear, and reflect both what your clients find acceptable, and your business needs.
In addition, most cloud accounting software packages allow you to send invoices online to your clients. They can look professional, are easy to manage and can even tell you when they have been opened by the client.
Send clearer messages
Once you’ve tweaked your invoices to encourage more prompt payment, next take a look at how those invoices are sent. Whether you email them directly to your clients, or send them through your accounting system, make sure that the following parts of the message are as good as the can be:
Subject line — consider including the word “Invoice” (or even “Invoice Due”) in the message subject line, so that your client knows this isn’t a regular email. Having that word staring at your client from their inbox each day will make it more difficult to forget to pay!
Message text — the body of the message should reiterate that the invoice is due and can also include the payment terms again for good measure. Keep it simple, friendly and positive, but also make sure all of the important information is in the message.
Structure your reminders
Sending out reminder emails or messages to your clients is a good idea, and it can help if these are structured so that the first message is a polite reminder whereas the second is a little firmer.
Develop a basic generic script so that you know what points to get across, but customise each message with the client’s specific project details and any additional information that might be relevant. Jon Norris at crunch.co.uk has provided a number of very useful invoice reminder templates that you can use.
Keep the tone friendly to avoid any damage to the relationship, and be sure that you have your facts straight when you get in touch with your client.
If unpaid or late-paid invoices are a consistent issue for your business, resulting in lots of time and effort spent trying to get the payments you are owed, consider taking your invoice follow-up a step further with Chaser.
This UK-based service was set up to “automate the process of chasing up customers over email”, and features in-built templates and a range of other tools to try and take away as much of the manual work involved with getting an invoice paid as possible.
Another option is to use PACTscheme.com to send an automated series of messages to your clients. PACT scheme also links to credit agencies so that your messages can include details on the specific repercussions that clients will face if they don’t pay up.
Provide the right payment support
It is important that your accounting and invoicing system supports the payment options that your customers prefer. Incompatibility between systems might be making it a little bit harder for your clients to send through payments.
For example, Xero has recently added support for Braintree, along with making invoices fully responsive to different screen sizes, to add to the list of options they support — as they know that some of their users will benefit from sending invoices that can be paid this way.
Try and find out if alternative payment options would be preferred by your clients, and make sure that your invoicing supports them. Even seemingly very minor barriers can easily add up to inaction when payments are involved!
The bigger picture
Cash is the fuel in your business’ engine, and when you are owed some of that fuel due to work that you have successfully delivered, it is important that you do everything you can to collect it.
But it is also important that you do so without damaging the relationships you have with your clients. Yes you’ve worked hard on the project and you deserve to be paid, but you also worked hard to get that client in the first place, try not to jeopardise the hard-won business unnecessarily.
Hopefully the tools, techniques and ideas in this post will help you on that journey. And if you need a little extra help to keep the wheels turning, DueCourse is always there for you.
Give DueCourse a try
How good would your life be if your invoices were paid the moment you sent them?Find out more