As a business owner, chasing outstanding invoices can be a major drain on time. For invoices which are significantly overdue, it can also be a drain on finances. Late payments is an issue most businesses face from time-to-time, with some businesses continually having to battle for payment.
Having to chase invoices for payment is often cited as one of the key issues for businesses, both big and small. If it becomes too big on an issue, it can even result in businesses failing altogether.
Take a look at our top tips to get your business invoices paid not just on time, but faster!
- Invoice as quickly as possible
This may sound obvious, and many businesses do invoice immediately after job completion, but some don’t. Issuing an invoice at the end of a month, when the work was completed 3 weeks prior, can result in delays. This is because the job is no longer fresh in the customer minds, and it may just get placed on the to do list.
Some businesses operate in a way where they’re able to issue an instant invoice to customers, but not all businesses can do this. For firms which go out to customers locations to carry out a job, they often have to complete the work, file a report to head office, and only then can an invoice be created. In this situation, using field service management software such as that offered by Red Zebra Software can help, as it allows the field agent to instantly invoice the customer after job completion.
- Make it easy
One of the best ways of getting invoices paid quicker is to make the process as easy as possible for the customer. Consider providing the customer with multiple payment options, such as a bank transfer, online payment, a telephone number to call and pay, or perhaps even PayPal. Different customers will have different preferred methods of payment, and simply increasing the number of ways you can receive a payment for an invoice can help in reducing the time it takes to be paid.
In addition to increasing payment method types, make sure the actual invoice is clear about when it needs to be cleared. Avoid confusing language such as ‘payment terms net 30’ and simply state when the invoice needs to be paid, such as ‘Please make payment within 30 days of this invoice’ – which is unlikely to be misunderstood.
- Get tough on late payments
You can forgive a customer for being late on a single invoice, it may be due to a mistake or admin error. However if a customer is continually paying invoices late and has to be chased for payment, it can be a good idea to introduce tougher measures to try and correct their behaviour.
For customers with regular late payments, inform them that you will begin to add interest to outstanding invoices in order to recoup any losses. This is usually a shorefire way of getting invoices paid on time. A further measure, usually reserved as a last resort, can be to stop work on any current or future work, until invoices are settled in full.