Wouldn’t life be simple if you could guarantee that your invoice would get paid on time, every time? Sadly, this isn’t always the reality. With the economy coming out of recession, there is a very clear and present danger that your business invoices won’t get paid promptly! What can you do? Well, here are 10 tips for making sure your invoices get paid.
1. Invoice promptly
Of course you meant to send it promtly – but did you? The longer you take to invoice someone, the longer it will take them to settle it…and the more likely the bill won’t get paid. Of course, no invoice normally means no payment. Do you remember the early days of running your business? When you were amazed that some business owners got lax with their billing? Then, you get busy servicing your customers and clients, and the admin slips. Before you know it, you become that business owner who has become slow to invoice.
If you are finding that you are getting behind on your admin, then give us a call. We can help take care of your bookkeeping and other financial processes to leave you free to run your business.
Cloud accounting software such as Xero include the feature to create recurring invoices. If you have a regular repeating invoice for the same amount with a customer, use this recurring invoice feature to cut down the chance of missing one.
2. No billing surprises
The more unexpected a bill, the more likely it won’t get paid. If a project is going to incur some extra expense or cost, always talk to the client or customer promptly about it. If you just crack on with it and don’t tell the customer about the unexpected cost coming their way, you risk getting into a payment dispute.
Before you bill someone, always make sure that:
· They are aware and expecting the bill
· They have agreed to pay the bill
3. Make it easy to pay your invoice
This is such a simple one, but it’s easily missed. Make sure you are removing any barriers to pay your bill and make it as simple and easy as you possibly can. Such as:
· Including a ‘pay now’ button linked to a payment gateway on your invoices. For example, Xero will do this for you with your Stripe account. Some customers may be happy for you to type in their card details over the phone using this option.
· If you visit the customer on-site, then have the means to take payment whilst you are there with them – e.g. take your card machine with you, or alternatively, technology is such that you can easily connect a gadget or download an app to your phone to take card payments – so there’s no need for an expensive and bulky card terminal.
· Including your bank details on the invoice. (You will be surprised how many businesses and tradespeople don’t do this).
· Offer your customers the option to do a bank transfer, set up a direct debit or pay by credit card. If possible, try to avoid offering the option to pay by cheque as getting to the bank can take time…and the cheque might bounce!
4. Set up Direct Debit or payment mandates
If you have regular customers, getting a direct debit mandate signed from them is a great way to be more in control of when they pay you. GoCardless is an inexpensive direct debit solution that integrates well with the likes of Xero. Our team can help you set up Direct Debit for your customers.
5. Ask for payment before you start work
There is no rule saying you can only invoice after you start work for a client. If you (or your customers) are not happy with a 100% upfront payment, why not ask for a deposit to get the work started?
6. Build a relationship with the Accounts Payable team
It always helps to be nice to the person at your customer’s business who actually pays your bill – and the bigger the customer the more useful this can be! The stronger the relationship you have with them, the more chance your invoice gets paid promptly and without being ‘delayed’. This may not be your direct contact; it could be someone in their Finance or Accounts Payable team. So, who in the customer’s organisation is responsible for Accounts Payable? Can you get their name and contact details to help ‘ease the way for your invoice to be paid’?
7. Understand your customers’ Accounts Payable process
Get the invoicing details right! Do you need a PO number on your invoice? How does the invoice need to be addressed, and to whom? What needs to be on the invoice for it to be paid promptly? Who at your customer’s organisation needs to sign off the invoice before it will be paid? Who in the customer’s organisation is responsible for Accounts Payable? If you don’t get the details right, then you are making it hard to get paid. Understand the process and you eliminate those things that will hold up payment of your invoice.
When a finance department is preserving cash for a business, they will reject an invoice for payment for the smallest reason.
8. Put in place a process for unpaid invoices
For example, this could include a series of communications when the invoice is issued, then a call or email the day before the invoice is due to see when it is going to be paid. Then a series of calls or emails a number of days and weeks after the invoice is due to be paid.
Most accounting systems such as Xero will have a feature for automated reminders for invoices. If you need more than the basic invoice chasing that Xero will provide, consider using a more sophisticated credit control tool … speak to us about your options here.
You can also use a more personalised chasing service – yes, good old-fashioned credit control – and have someone chase them up for you. Speak to us about setting this up for you.
9. Consider offering a payment plan for large unpaid debt
Most customers want to pay your bill, but sometimes stuff gets in the way. So consider offering a payment plan – getting paid over 6 months in instalments is better than not getting paid at all. Using an app like Go Cardless can help here as well – by automating those instalment payments.
10. Stop work if your invoices don’t get paid
Sometimes you have to say STOP – sometimes because otherwise you wil lose out big time, and sometimes because it is the only way to get their attention. This is a distressingly common problem, where a business owner carries on working for a customer in the hope that the invoices will get paid eventually. The debts pile up and may never get paid. You’ll be surprised how quickly your unpaid invoices may get paid if you stop working for a client.
Need help looking at your business to make sure your invoices get paid? This is just the top 10 strategies – we have others as well! We can help review your business processes and implement a system that works for you. Get in touch for your free review.
