As a small business owner, the thought of asking for payment for services rendered (sometimes repeatedly!) may seem like a daunting and awkward process.
By having an invoice collection procedure in place and arming yourself with all the correct information, you’ll be prepared for any situation. You’ll be equipped to maintain healthy customer relationships and a strong, steady cash flow.
Following are 6 tips on how to get invoices paid fast while maintaining great client relationships.
1. Set and advise your payment terms upfront
The best way to ensure your invoices are paid on time is to set clear expectations from the very beginning.
Outline your payment terms from the first proposal you send so that there are no surprises when both parties are ready to sign. Follow up by reviewing these conditions during your briefing calls and onboarding process.
Make sure you include the following points:
- How you send your invoices
- How your client can pay you
- When you send invoices (i.e., fortnightly, monthly)
- Payment terms (i.e., 7-day terms)
There are several carrot and stick tools that you can apply. For an added incentive:
- consider offering early payment discounts
- interest-free instalments
- waiving credit card fees for those on direct debit plans
If your carrot doesn’t work, you could use a gentle prod by:
- asking for an upfront deposit on the next job
- deterring late payments with interest charges
The key is to be transparent and ensure that all options are detailed in your service agreement. Be clear about your trading terms when beginning a new business relationship.
2. Invest in e-Invoicing apps or programs
Keeping track of your invoices and outstanding payments can be tricky if you’re constantly generating invoices manually and sending via email.
Cloud accounting software provide a single platform for managing your accounts receivable information and financial processes. Using an invoicing system means you don’t have to remember which clients you have invoiced or when and who hasn’t paid you yet. E-invoicing is highly effective at preventing invoicing fraud.
Your invoicing software can also be set to send friendly reminders that go out automatically to let clients know they’ve missed a payment due date.
Automatic reminders give your customers a nudge without making other business communications awkward or uncomfortable.
3. Stay on top of missed payments
Always make sure the information on your invoices is accurate. Inaccurate information can cause delays or disputes. Double check the amounts, dates, description and client details on your invoices before sending them out. If your customer uses Purchase Order numbers, make sure it shown on the invoice.
If you have sent off your invoice and the client missed the due date, it’s important to maintain a calm and understanding demeanour. Sometimes things slip through the system or get overlooked. A simple, friendly reminder might be all that’s needed.
Ensure your first reminder is friendly; it’s important not to ruin client relationships with harsh or aggressive language.
4. Communicate with the right person
When communicating with your client, make sure you’re speaking to the right person. Check to see if they have an accounts department, ask your contact who is the best person to speak to about getting paid. When sending reminders always remember to include a copy of the invoice/s with each email. If your emails go unanswered, call and ask if the client has received your previous emails your emails. Some good talking points might include:
- Did you receive my last email about the overdue debt? If not, can you please check your junk folder?
- Are there any problems with the invoice that we can resolve while I’m on the phone?
- When do you think payment will be made?
If you still aren’t getting paid, set up a reminder to call your client on a regular basis, follow up with a weekly call. Keep the tone friendly and polite but be persistent. Don’t forget it’s the squeaky wheel that gets the most attention. Follow-up any phone calls with an email confirming what was discussed and agreed.
Always keep a record of your correspondence (both email and on the phone). Details of who you spoke to, the date and the time, also record what was said. Did they make any promise or statement about when you’d get paid? Having this information is vital if you need to escalate things further.
5. Press Pause
Be prepared to put a pause on providing goods or services until the outstanding invoice is paid in full. Not only will this encourage payment, but it could also save you from further debt should your client be in financial trouble.
While it may seem counter-productive to decline additional work, collecting monies owed and your business’ cash flow health is critical to protecting and preserving your business in the long run.
By following the above tips and keeping debtor procedures in place, you’ll spend less time worrying about getting paid and more time focusing on how to add value to your business.
If all else fails:
6. Bring in the Big Guns
If, despite all your best efforts, your invoices are still not getting paid, call in the experts. There are reputable, cost-effective debt collection agencies that are highly skilled at helping you recover the money owed to you. Don’t be afraid of seeking expert advice. There may be fees and costs associated with bringing in the experts, but 90% of something is always more than 100% of nothing.
Do you need help chasing your unpaid invoices? Connect with Numble today for a free consultation.
