Don’t Just Earn Money. Get Paid.
Having customers and doing great work is not enough to keep your business in shape; you also have to get paid for the work you do. While invoicing may be an afterthought to budding entrepreneurs, late payments can be a huge hassle.
To avoid cash-flow problems, consider these tactics to make your invoicing process work as smoothly as possible.
Automate the invoicing process and send your invoices faster. Make it easier for your clients to pay you and skip trips to the bank to cash paper checks. These benefits and more make digital invoicing a 21st-century no-brainer for many businesses.
Make the invoice clear and complete
Make it as easy as possible for clients to approve your invoice by clearly itemizing your work, setting payment deadlines, and including all of the information your client requires. Larger organizations may need specific codes or formatting to process your invoice. Double check dates and dollar amounts. A few minutes of extra work could save you days of delays.
Build a human relationship
It might behoove you to get to know the person who signs your checks (especially if it’s one particular person). To pursue this tactic, build a relationship before you have a payment issue. When you get a new client, call their accounts payable department, find the person who processes your invoices, and introduce yourself. Establishing a personal relationship will help you solve any invoicing problems that might arise down the road.
Follow up promptly if you’re not paid on time, but be nice
FreshBooks found that “[a] simple ‘please pay your invoice within’ or ‘thank you for your business’ can increase the percentage of invoices that are paid by more than 5%!”
Make it cheaper to pay early — and more expensive to pay late
Offer discounts for speedy payments. And be upfront about your fees and service rates for late payments.
Invoice in small chunks
If you’re charging your clients a large sum for work performed over a lengthy duration, breaking it up into smaller invoices can help ease the process for both of you. You’ll have a stream of money coming in, and they won’t be hit with a monster bill that they might have trouble paying in one fell swoop.
Stop work if you’re not getting paid on time
Tell the client that unfortunately, your accounting department won’t let you proceed until outstanding invoices are resolved. Say this even if you are the accounting department.
Or require payment in advance
This won’t work for every business, but it will guarantee you get paid for the work that you do.
Speaking with a financial professional can help you understand the best practices for your business. [permalink id=”200″]Sign up today[/permalink] for a free business consultation with an expert in cash management at First Bank.