If you are a large business, you can afford 30 and 60 day net in most cases. It doesn’t affect your everyday overall picture. However, most small businesses are on a much tighter timeline, and even a single invoice unpaid can mean that payroll is late. How are you supposed to stop people from paying late? While you can’t, there are a few things that you can do to encourage prompt payment.
A lot of people think that invoicing is simple: ask someone for money, and they get it to you. However, life gets in the way sometimes, and sending invoices—or even paying them—can be hard. Strong invoicing practices will help with this.
Don’t Wait—Always Get Your Invoices Out
Your business is booming, and it seems like you haven’t had time to sit down at a computer with your glasses and a cup of coffee and get that invoice out to about a dozen customers. Customers will quickly push what they owe you to the back of their minds (they’re busy too), and sometimes this can further delay. Instead of waiting, set aside some time out of any busy day and get your invoices out. If you can’t do it manually, there are cloud accounting software programs that can help you prepare and send invoices quickly with a few simple taps.
Follow Up, Always
Again, it can be hard when you’re busy! You’re so busy trying to make money that you can forget to collect, and sometimes when an invoice goes unpaid, follow-up doesn’t happen on time or at all. To help solve this issue, cloud accounting software can be set up to send you alerts about following up on invoices. Otherwise, you can delegate the task to someone else so that you actually get your money instead of having to chase after it for months on end.
Some people legitimately forget that they need to pay an invoice. In other instances, your invoice is just at the bottom of a very tall stack of other money owed. How do you stand out against that pile? While it may initially seem a little mean, even a 5% fee for an overdue invoice is motivation enough to stick your invoice a little higher in the pile for many people. Every invoice individually should be charged or not charged, even for repeat offenders.
Send Out Reminders
Even before you personally follow up on an invoice, you should be communicating with your clients. Send then gentle nudges and reminder emails just so that you stay at the top of their minds. Often, this will help get an invoice get not only on time, but early, just so they can delete your reminders guilt-free. Once the time is up, picking up the phone for a quick reminder is also a great idea.
Good invoicing policies can make all the difference between paid and unpaid invoices, which is a huge, important stepping stone for your business. Make sure you don’t miss out.