Sending out invoices to your clients and getting them paid in a timely manner is important for your business to survive. To make sure you minimize payment delays and continue to operate your business smoothly, here are our best tips for handling your client's invoices.
1. Discuss Payment Terms First
To avoid miscommunications and payment delays, it's best to confirm payment terms and details before going ahead with completing an order. It's a good idea to get your clients to sign a policy letter that explains how the payment terms work and what consequences there will be should a payment be missed. This can prevent your clients from missing payments in the first place or encourage them to ask you for personalized payment plans in advance. If you know when your client can pay, you can adjust yourself accordingly and keep the relationship intact.
2. Set Up Flexible Payment Options
The more payment options you offer, the less likely your customer is to skip a payment. Credit cards, electronic transfers, cash, money order, cheques, and even PayPal, Apple Pay, or Stripe are easy to accept and can make it simpler for customers to pay you. If you only accept one form of payment, it may be more difficult for your clients to get you the funds in a timely manner.
3. Respect Your Timeline, Too
If you expect your clients to pay their invoices on time, then you should also take care to fulfill your products or services on time and send an invoice in a timely manner. Try to avoid sending an invoice shortly before it's due because this doesn't give your client much time to prepare payment. Instead, ensure you send invoices out quickly and deliver on your goods or services as discussed, too. Your clients also have a financial plan and timeline to follow so it's courteous and advantageous to respect those timelines, as well.
4. Create Detailed Invoices
Your clients are likely ordering from more than one supplier so they may not recognize what the invoice is for as soon as they receive it. If your client has to work at figuring out what the invoice is for and what each charge on it represents, it will delay their ability to process your invoice and pay it. To avoid this delay and confusion, include all details on your invoice. There should be a breakdown of all charges with clear explanations for each one. Payment terms should be visible and easy to understand. The terms must be the same as the previously agreed-upon terms to avoid any confusion. This will help you get your client to pay their invoices much faster.
5. Follow Up ASAP
As soon as you notice a payment is missing, you should contact the customer directly to ensure there are no issues they are waiting on you to fix before sending payment. The quicker you connect, the quicker you'll get paid. Be sure you are contacting the right person at the client's company to ensure there are no further delays in processing your invoice and receiving payment. If there is an issue on your end that your customer expects you to sort out, you can get to work on it immediately to ensure your payment comes in.
6. Maintain Excellent Invoice Records
To stay on top of your invoices and make sure they are sent out on time and paid on time, you should keep excellent records. A digital accounting software system can make it very simple for you to manage your clients' invoices. This will help you stay organized and ensure you manage your incoming funds and outgoing expenses more easily.
7. Consider Invoice Factoring
If you are having difficulty getting your client to pay an invoice on time, then it may have repercussions on your business. It can slow down your ability to order supplies and pay your employees. Your incoming funds are essential to the survival of your business, especially if you are just starting out and have little coming in. Invoice factoring helps you convert your invoice into cash so you can continue to operate. Essentially, you are selling your invoice to a factoring company that will pay you nearly the total value of the invoice right away. When the client pays you, you can then pay the factoring company back. They will also charge a small percentage to cover their fee. You're receiving a little less to be able to receive at least most of the funds right away.
8. Ask for a Deposit
Asking your clients for a deposit before you fulfill your order is a great way to secure some funds early on to cover the cost of supplies. This also makes it more likely for your customer to pay the balance since they have already invested. Asking for a small deposit is usually a request that customers understand and won't have an issue with. It also ensures you have at least some cash flow going on throughout the transaction.
9. Offer Incentives to Clients
To encourage your clients to pay their invoices quickly, offer incentives. For example, a rebate or discount that applies to early payment or payments before 30 days will encourage them to pay quicker. Offering incentives can help you get your cash flow moving much easier and will minimize the need for chasing your clients down for money. If they receive benefits and rebates for early or on-time payments, clients will be most likely to pay.