Regardless of the size and sector of your business, or if you run a small firm or are a freelancer, it’s essential to familiarize yourself with the top methods and typical errors that occur when managing unpaid invoices. Detained payments can take their toll on your business relationships, hurt your reputation, and lead to lost customer trust, putting your business on the road to unsuccess.
Unpaid invoices are just as preventable as they are inconvenient, and you can take steps to ensure their timely payment or at least a reduction in the number of failures to receive your money on time. Several common mistakes are often witnessed during the invoicing management processes, so let’s discover them to prevent further unpaid invoices from messing up with your business’ bottom line.
You Don’t Keep Track of your Unpaid Invoices
Managing cash flows represents quite a challenge for today’s small businesses, and as reports show, 82% of them mess the job up. Failing to keep a record of invoices that have been sent and not paid isn’t something that happens in extra-agglomerated and large businesses where thousands of orders hit them on a daily basis.
Keeping track of invoices can quickly become chaotic when some factors and requirements aren’t met, such as having well-trained employees manage invoices correctly. Furthermore, underdeveloped businesses tend to omit to store business records that often go beyond invoices, such as expenses and discounts.
Record keeping, whatsoever, isn’t just a good-to-have discipline to ensure compliance with rules and regulatory requirements but also a way to streamline your business and ensure fine-tuned communication with your clients so they pay you on the due date. Accurate monitoring of unpaid voices will help you follow up with your payers and jog their memory when outstanding balances exist. You’ll also make it easier to send reminders when needed and ensure your business stays on top of its accounts receivable for other aspects of your firm to gain more prioritization.
Say your client has received consecutive reminders about an unpaid invoice but still failed to fulfill their duty. Then, you can submit a last reminder explaining that not paying by the due date will lead to fulfilling a complaint with your attorney. This is incredibly helpful when working with firms that try to hide the fact that they’re struggling to pay bills on time.
Your Invoices Passed Unobserved
Depending on the company or employee types you’re conducting business with, your customers could be inundated with work, particularly emails. They are likelier to overlook your invoices as their schedule gets more cramped, reminding you that mistakes and errors are only human, which is where digital and automated billing systems enter the stage to help prevent such unfavorable instances.
To ensure your invoices are observed and noticed, employ very transparent subject lines when submitting your email so the employees immediately sense the urgency of your communication. For more safety, you can politely express at the bottom of the mail that you expect a receiving confirmation message.
Specially designed digital tools can notify you when your customers see your invoices so you’re never left wondering if they left you on hold intentionally or simply failed to notice your message. But extra precaution doesn’t end here; as stated, you can rely on bill and pay software to do all these laborious and time-consuming tasks, thus freeing up significant time on behalf of your staff.
Businesses invested in streamlining their invoicing systems have endless options to do so, thanks to today’s easily findable recruitment in various business sectors and expert solutions that tackle the under-the-hood issues. It’s a matter of searching and seeking the right service until you see your business speeding up lengthy and obstructive duties, so ensure this assignment ranks higher on your checklist.
There are Strong Currency Fluctuations
Detained invoices due to holiday chaos are one thing, but repeatedly overlooked client payments are a completely different problem. More often than not, poor currency fluctuations are at fault for the delays in payments and further witnessable complications during the processes, making you collect your money later than established. For instance, North American companies lost around $34.3BN last year, registering an ATH since 2013. Usually, one of the parties could witness losses if a currency’s value changes between the contract’s signing time and the delivery date.
These happen in situations such as dealing with a customer in a country with unstable currency. Other times, it can be the issue of using the wrong currency or having the fact that not every customer wants to pay in USD or your default currency slip your mind. Some simply leverage that they can see the sum expressed in their local currency, which is more than fair. However, you’ll have some work to do as you’ll need to convert sums and do some extra work.
Digital invoices can take the stress off your shoulders and remove any struggle as they exhibit the payment based on the exchange rate that day. Additionally, you can both agree on adjusting the total depending on the reference date or sharing the currency risk. With good communication, negotiation, and digital tools, these unpreventable inefficiencies can be smoothly overcome.
You Wait Too Long to Send Reminder Invoices
Half a month after you’ve sent an invoice and realistically speaking, it might have even disappeared from your recipient’s timeline by that time. Many business owners delay sending reminder invoices, send wrong signals to customers, and personally hinder their own payments’ collection.
Not reaching forgetful customers on time could bring about misunderstandings, potentially making customers believe they should wait for a final shipment that’s been met with a delay. If this scenario occurs, they will likely overlook a consequent invoice breaking into their mailboxes.
For safety reasons, you should be prompt with your reminders so your customers can’t fail to acknowledge their financial responsibilities. Two weeks after the shipment is done should be ideal, and one week can be enough for rapid payers. For extra confidence, activate automatic reminders to regularly send your invoices, ensuring clients never miss out on an outstanding balance again.
The Terms of Payment are Not Clear
Business owners must introduce payment terms in their invoices and contracts, but it doesn’t always mean that such data additions are always correct or intelligible. Sometimes, the terms may be vaguely discussed and understood, miscommunications may appear, or gaps due to different time zones and languages could weaken the communication’s efficiency.
If terms aren’t discussed and customers aren’t aware, confusion can appear and lead to delays. It’s critical to be precise about your payment terms so there aren’t inconveniences along the way that could lead to customers’ failure to meet their duty.
In a Nutshell
Sometimes, clients aren’t intentionally overlooking invoices, but the business at the other end of the spectrum fails to facilitate their money’s road into their wallets. Sending unintelligible, poorly detailed, delayed, or insufficiently informed invoices can eventually hurt the company tabling them.
Ensure you’re up to date with the best invoicing practices and leverage today’s expert tools and techniques to ensure you won’t allow detained payments to hurt your business’ BTL.