Wouldn’t life be simple if you could guarantee that your invoice would get paid on time every time? Sadly, this isn’t always the reality. With the economy coming out of recession, there is a danger that your business invoices may not get paid in a timely fashion. Here are our best tips for getting your invoices paid:
1. Invoice promptly
The longer you take to invoice someone, the more likely it won’t get paid. Of course, no invoice normally means no payment…
Cloud accounting software such as Xero includes the feature to do recurring invoices. So, where you have a regular repeating invoice for the same amount with a customer, use this recurring invoice feature to cut down the chance of missing an invoice.
If you are finding that you are getting behind on your admin, then give us a call. We can take care of your bookkeeping to leave you free to run your business
2. No surprises!
If a bill is not expected, it probably won’t get paid! If a project is going to occur some extra expense or cost, always talk to the client or customer about it. If you just crack on with it and don’t tell the customer about the unexpected cost coming their way, you risk getting into a payment dispute.
Before you bill someone, always make sure that:
- They are aware and expecting the bill
- They have agreed to pay the bill
3. Make it easy
This is such a simple one but easily missed. Make sure you are removing any barriers to pay your bill. Such as:
- Including a ‘pay now’ button linked to a payment gateway on your invoices. For example, Xero will do this for you with a Stripe account. Some customers may be happy for you to type in their card details over the phone using this option.
- If you visit the customer on-site, then have the means to take payment whilst you are on site. E.g. with a card machine.
- Including your bank details on the invoice. (You will be surprised how many businesses and tradespeople don’t do this).
- Offer multiple ways for your customers to pay. Eg. Bank transfer, direct debit, or credit card. Try to avoid offering the option to pay by cheque as getting to the bank can take time.
4. Set up a Direct Debit
If you have regular customers, getting a direct debit mandate signed from them is a great way to be more in control of when they pay you. GoCardless is an inexpensive direct debit solution that integrates well with the likes of Xero and other accounting software.
5. Get paid up front
There is no rule saying you can only invoice after you start work for a client. In fact, we will ask for payment upfront for some of our services, such as a client wanting a one-off tax return. If you or your customers are not happy with a 100% upfront payment, why not ask for a deposit to get the work started?
6. Build a relationship with the person who pays you
It always helps to be on good terms with the person at your customer’s business who pays your invoices. The stronger the relationship you have with them the less chance you have of having your payment “delayed”. If you don’t already know who this person is at your customer’s organisation it might help to find out.
7. Understand your customers' accounts process
Do you need a PO number on your invoice? How does the invoice need to be addressed and who too? What needs to be on the invoice for it to be paid promptly? Who at your customer’s organisation needs to sign off the invoice before it will be paid? Who in the customer’s organisation is responsible for accounts payable? And can you get their name and contact details to help ‘ease the way for your invoice to be paid’?
When a finance department is preserving cash for a business, they will reject an invoice for payment for the smallest reason.
8. Create a process for unpaid invoices
For example, this could include a series of communications when the invoice is issued. Then a call or email the day before the invoice is due to see when it is going to be paid. Then a series of calls or emails several days and weeks after the invoice is due to be paid.
Also, most accounting software have a feature that will automate reminders for you.
9. Consider offering a payment plan
Most customers want to pay your bill, but sometimes stuff gets in the way. Consider offering a payment plan. Getting paid over 6 months in instalments is better than not getting paid at all.
10. Stop work if your invoices don't get paid
If you get to the point where you have unpaid invoices and work still to do, stop working. Don’t carry on in the hope that they will get paid eventually as you may start to incur debts yourself. You’ll be surprised how quickly your unpaid invoices may get paid if you stop working for a client.