7 Tips to Get Your Invoices Paid Faster
Late invoices have long been a thorn in the side of small businesses.
“More than a third of all invoices are paid late,” cloud-based accounting software platform Xoom claims … and that was before Covid-19 started to gnaw away at the global economy.
Tardy payments wreak havoc with small business’ cash flow, and that in turn can directly imperil those companies’ ability to operate. So even if the world were completely normal right now, figuring out how to get your invoices paid faster would improve your business.
But now, more than ever, it’s imperative that you use every tactic at your disposal to make sure you’re compensated on time.
Here are several things your small business can do:
Tips for Quicker Invoice Payments
- Be Quicker Yourself: Some small businesses will let a batch of invoices pile up before sending them out. The logic? Tackling a bunch of invoices at the same time is a more efficient way to deal with them. Perhaps, but every minute you delay sending out an invoice is a minute later you might get paid. Make invoicing an immediate next step after fulfilling orders or completing services.
- Set Payment Terms Up Front: Before you make one keystroke or spend a minute on ideation, make crystal clear up front all terms of payment — when you should be paid, acceptable methods of payment, and any penalties and/or incentives. More importantly, make sure your client puts in writing that they understand and accept those terms.
- Make Clear & Simple Invoices: The more difficult you make it for a client to understand your invoice, the more that can go wrong — and the greater the possibility a client will look at it and go, “I’ll tackle this later.” The invoice should have all necessary information for payment clearly and cleanly labeled. Extraneous information should be limited or nonexistent.
- Facilitate Automatic Payments: This is more applicable to clients you do regular work with than one-off jobs. Whenever possible, getting clients to agree to an automatic payment made on a schedule – every month, every two weeks, every quarter, etc. — via a credit card or checking account requires less effort on their part, and ensures you have one less income source to worry about.
- Mind Your P’s and Q’s: OK. “Be polite” is good advice for anyone in any walk of life. But you’d be surprised how effective saying “please” and “thank you,” and in general striking a courteous tone, can be in maintaining a strong business relationship and making sure all communications – including your invoices — are properly prioritized.
- Reminders Are Fine: No one wants to be a pest. However, there’s a difference between texting a busy friend every few hours, and emailing a client about their late payment every few days or so. The latter isn’t rude — it’s reminding a business partner to make good on their end of the deal. In some cases, even good clients simply forget to tackle invoices. A regular, courteous and short (just a couple of sentences) reminder will jog the memory.
- Establish (And Enforce) Late Fees: This form of negative reinforcement typically is effective. But when money’s tight like it is right now, people are going to think long and hard before incurring even more costs by way of late fees. If it seems harsh, remember: Your client would be displeased with late work, so why would a late payment be acceptable? When it comes to enforcing late fees, don’t be angry or harsh in your communications: Simply make sure the late fees are established up front, then dispassionately include them in reminders, as well as follow-up communications when you assess a penalty for late payment.
More Help While Money’s Tight
McManamon & Co. offers a full line of business services to small and midsized companies, and we’re well aware of the economic toll the past few months have taken on the business community. If you’re looking for ways to make your numbers add up, we can help you on the accounting front, or we can help you strategize via our general consulting services.
McManamon is here to help. Get in touch with us today by calling 440.892.8900 or contacting us online.
Tags: accounting, consulting, invoices, McManamon, McManamon & Co., small business, small business accounting, small business finances | Posted in accounting, Consulting, Financing, McManamon & Co., small business