Delays in invoice payments can cripple small business.
Let’s face it, delays in invoice payments can cripple small business. Here are some tips to get paid on time.
It’s no secret that delays in receiving payment for your invoices can bring a small business to it’s knees. And, unfortunately, while some customers are ideal and always pay on time, many do not. This can leave you with major financial gaps in your business cash flow, making it difficult to plan (and work) ahead.
However, with a few simple tweaks to the way you invoice customers, you can make sure you get paid faster. Here’s how.
Make it Personal
When starting up with a new client find out if they have any specific invoice requirements. After all, you will only delay payment further if you have to resubmit your invoice due to missing information. Ask each customer if you need to include a purchase order number on your invoice, or an employer identification number. Should you list a detailed breakdown of the services you provided? And, find out who you should direct the invoice to – perhaps it’s an accounts manager or the company director themselves.
Days Vs Net
Using terms such as net 30 or net 60 can be confusing. If your client doesn’t know what this means, they might not have the time (or patience) to find out. So, to avoid confusion – and ensure you receive invoice payment on time – include terms like “payment is due within 30 days of receiving this invoice”. This way, the terms are clear and everyone understands exactly when the invoice is due.
Pleases and Qs
As you know customer service is key to small business success, and being polite doesn’t end with your paperwork. Including “please” and “thank you” on your invoice is good etiquette and could speed up the process of your invoice payment.
Charging interest on late payments is a sure fire way to get your invoice noticed – and paid – on time. If you do include an interest fee you must include this in your initial customer contract or terms and conditions. You might, for example, apply an X per cent interest fee per month on late invoice payments.
In our experience, we have seen invoices paid much faster when clients implement strong credit management processes. This is why APositive offers an outsourced credit management service which saves you time by:
• Integrating with payroll and timesheet software;
• Managing customer credit application approvals and limits;
• Credit checking your customers on your behalf; and
• Assisting with the process of collection and follow up, where required.
Detail It Right
Make sure your terms of business are clear and precise. Include information such as the customer’s details and ABN, your details and ABN, your rates, your terms of payment and authorised signatory of timesheets. You should also outline your delivery process and system so that the customer knows exactly what is expected, and when.
Here’s how APositive can advance payments for your outstanding invoices if late payments are affecting your cash flow.