When starting out as a new business, you’ve got 101 things to think about. Not only do you have to market your products, ensure you’re getting enough sales, and keep your staff happy, but you also have to make sure you’re getting paid by your clients on time.
Invoicing can be a tricky area for business owners with no prior experience. But it doesn’t have to be. With a few simple tips and tactics, you can ensure you stay on top of your invoicing with no problems at all.
Make Payment Easy
When it comes to invoicing tips, one of the most frequently cited is to make payment as easy as possible.
If you only accept payment by check, you are not making it easy for your clients. Instead provide them with as many payment options as you can, including bank transfers, credit card payments, and online payment solutions like PayPal.
You are far more likely to speed up the payment process if you make it easy for your clients, so this should be one of the first things you do.
As well as providing payment options, there are other steps you can take to make it easier. For example, you might want to discuss different payment timeframes with your client. For some, your 15-day timeframe may not be enough. But you don’t want to lose business, offer them 30 days instead, which might work much better for them.
Follow Up Fast with Unpaid Invoices
Another way to make sure your invoices get paid faster is to have someone in your business in charge of unpaid invoices. Have a system in place where as soon as an invoice has not been paid within 15 days, or whatever your timeframe is, you follow up.
You could start by sending an email on the day that the invoice becomes overdue. After that, a phone call can be the most effective option. And after that, you will have to be persistent.
Make sure your clients know that you will always follow up with invoices that go unpaid, and don’t let them think that you won’t otherwise they are less likely to pay quickly in the future.
Consider Using a Factoring Company
One way to ensure you get paid without the hassle of chasing up your invoices is to use the services of a factoring company. They will buy your accounts receivable, paying you in cash immediately, and taking a small percentage of the amount in return.
You then don’t have to worry about the client because the factoring service will be responsible for collecting the money.
Look around for a good factoring service, which you may be able to find using a website like factoringdirectory.org. Make sure you check the rate that you will be paid, because they all vary, and find one that offers a good service without charging too much.
You will get slightly less than if the client pays you directly, but it can be well worth it if you spend a lot of time chasing up your unpaid invoices.
Provide Incentives for Quick Payment
One way to encourage quick payment of your invoices—at the same time as building goodwill—is to provide incentives for those clients who pay early.
The easiest option? Provide them with a small discount. If you can afford to do this, it can be highly effective. Those clients who pay early get a nice little discount, those clients who might have paid late end up paying early, and your cash flow improves—everyone’s happy
Of course, this can work the other way as well because you can add fees onto invoices that are paid over a week later. Make it clear to your clients so they are well aware of the fees, and if they complain you could cancel the fees as long as they pay on the day.
Use a Good Invoicing System
An invoicing system can make life a lot easier for you. You might want to try a cloud-based system, which can speed the whole thing up for you. This is great if you are doing the invoicing yourself and it is taking up a lot of time that you could be putting into other tasks. Automated payments are another option that can speed things up.
Make Life Easier on Yourself
Starting out in business is tough. You’ll be spending all hours of the day on keeping things running, and one of the things you don’t want to be worrying about is chasing up invoices. Use these tips to help make sure you get a good system up and running. Ensuring you get paid on time will make things a lot easier and take away a lot of the stress of running your business in the early days, so consider getting a good invoicing system into place essential.