In the dynamic business landscape, cash flow serves as the lifeblood of a company. However, chasing outstanding invoices can be a daunting task. The good news is that with a strategic approach, any business can streamline its invoice collection process. Let’s explore some effective ways to ensure you get paid on time.
1. Clear and transparent terms
Start on the right foot by establishing clear payment terms from the beginning. Clearly outline due dates, late fees and any other relevant information on your invoices. This sets expectations and reduces confusion.
For instance, if your payment terms extend to 30 days from month end, you might be providing an extended waiting period before receiving payment. This can lead to delays, especially if individuals wait until the last day of the month to settle their invoices after making a purchase earlier in the month. If that sounds familiar, think about changing your payment terms for better results.
If you’re unsure about how to format your invoice, check out the government website for a comprehensive guide here.
2. Prompt invoicing
Don’t wait to send invoices. The sooner you bill your clients, the sooner you can expect payment. Utilise automated systems like Xero to generate and send invoices promptly after delivering goods or services.
Scheduling invoices on platforms like Xero is a straightforward process, significantly reducing administrative workload. Automated features ensure that invoices are sent out automatically on predetermined dates, streamlining the invoicing process.
3. Friendly reminders
Sending friendly reminders as the due date approaches is a courteous way to prompt payment. Consider automated reminders through email or even a quick phone call for a personal touch.
4. Incentives for early payment
Encourage timely payments by offering small incentives for early settlement, such as a modest discount. This can motivate clients to prioritise your invoice over others.
5. Professional communication
Maintain a professional and open line of communication. If a client is facing difficulties in making payments, understanding their situation and working together on a feasible payment plan can strengthen your business relationship.
6. Escalate gradually
If gentle reminders don’t bring results, slowly escalate your approach. This might include more assertive communications, adding late fees, or, in extreme cases, seeking assistance from a debt collector or considering legal action as a last resort.
Keep in mind that establishing clear and transparent terms will support your case in the event legal action becomes necessary.
7. Use technology
Leverage the power of technology to your advantage. By implementing invoicing and accounting software, such as Xero, you can streamline the entire process, making it easier for both you and your clients to track payments.
8. Offer multiple payment options
Make paying hassle-free for your clients by giving them different ways to pay. Whether it’s with credit cards, online transfers or ‘buy now pay later’ choices, offering options can speed up the payment process.
Think about where your customers usually pay – if you have an online store, provide different ways to pay when they check out. You can also add an online payment option to your invoice. This means people can easily click a link or scan a QR code and pay right away, making it simple for them.
Payment methods include using Debit/Credit Card, Bank Transfer, Online Payment Platforms (like PayPal, Stripe, Square), Mobile Wallets (such as Google Pay, Apple Pay) and Buy Now, Pay Later Credit options (for example, Klarna).
Communication is key
Chasing outstanding invoices doesn’t have to be a headache. By implementing clear terms, employing friendly reminders and leveraging technology, you can create a smooth and efficient process that ensures your business gets paid on time, every time. Remember, communication is key. Approach the process with professionalism and empathy and you’ll find that most clients are more than willing to fulfil their payment obligations.
Remember, as your business grows, your requirements may shift, and it’s perfectly fine to seek additional support. If you have any questions or need assistance with invoicing, feel free to get in touch.
