Have your sales been doing well but your business is still struggling with cashflow problems due to delayed payment? Invoicing well increases the probability of getting paid on time and keep your cash flow in check. Follow the invoice checklist below to be on a steady track for speedy payments.
Mutually agree on payment amount and terms in advance
Give cost estimates before the provision of service so that clients have a better idea of what to expect. Having a written quotation also helps to prevent misunderstandings.
Use an online accounting software to make your life easier
Managing your business finances on Excel and creating invoices manually can be a nightmare. Using a reliable online accounting software such as Xero not only helps to generate invoices quickly and easily, but it also helps to reduce human error.
Check that all services are itemised in the invoice
Making the payment process as smooth as possible for your client is crucial if you would like to get paid on time. Nobody wants to go through the trouble of revoking an erroneous invoice and to generate a new one again.
Even if a service provided was complimentary, it is a good practice to list it on the invoice as a gentle reminder of your goodwill. This aids in forging stronger ties with your client. However, it is also important to highlight if the complimentary service is one-off to prevent customers from requesting the same treatment in future.
Provide alternative payment means
Many businesses miss the opportunity to get paid faster by leaving out alternative means of payment through credit cards, cheques, or PayPal, on the invoice. Be sure to account for the relevant transaction fees when you allow your clients to choose from a variety of payment methods.
Integrate invoicing into workflows
There are add-on applications available to integrate the invoicing process into existing processes such as inventory, project management, and other workflows. As such, feel free to seek feedback from the working teams and explore options on how to improve overall efficiency in invoicing.
Brand the invoice
Grab the opportunity to brand wherever possible, even on invoices. Ensure that the aesthetics tie with other branding collaterals. As much as possible, try sticking to your corporate colours for brand consistency. Accounting softwares usually come with customizable templates to facilitate the branding of an invoice.
Submit invoices immediately upon service completion
Every day you wait means that your payment will be delayed for another day. Therefore, invoice as soon as you can once you have completed your service.
If you operate on a retainer basis, consider invoicing on the last Monday of the month to allow sufficient working days for your invoice to be processed.
Automate reminders prior to payment due date
Set automated reminders through your online accounting software to notify your clients when their payment is almost due, and when they are overdue. This not only saves you time from chasing late customers, but also helps to maintain the client-provider relationship.
Know how to deal with late payers
Perhaps one of the most important points in the invoice checklist, is to know how to manage late payers as it will affect their future behaviour. When reminders go ignored, and clients cannot be reached via e-mail, try giving them a call. Remember to be respectful and friendly while being firm about the payment terms.
More often than not, clients understand that the company’s working capital, particularly for start-ups, will be affected when payments come in late. As such, it is important to speak to clients from their perspectives. Check if the client has any underlying reasons for the delayed payment to see if it stemmed from a lack of funds, slow processing system, an administrative fault, or sheer forgetfulness. With that knowledge, you will be able to better follow up with subsequent payments. For clients who consistently make late payments with no good reasons, it may be wise to reconsider the business relationship.
Outsource invoice management to professionals
The truth for SMEs is that manpower may be insufficient to handle invoices professionally. Outsourcing this aspect can be a way to cope for the short run. Consider online accounting softwares that enables you to control the accountant or bookkeeper’s access to selected private information.
Adopting the invoice checklist above and monitoring the progress will improve your company’s overall invoicing process and thus resulting in a healthier cash flow. So take the time to get the process right.
The reality is that some clients may still pay late regardless. In such situations, there may be a need to look at short-term business financing such as invoice financing to tide you through the cash flow shortage.
Interested to learn more about invoice financing? Here’s why you should consider invoice financing and find out how invoice financing with Funding Societies work.
In need of funds? Check your eligibility now!
Disclaimer: The above information is not a loan offer and is provided for information purposes only. The information is not intended to be and does not constitute financial advice or any other advice. All applications are subject to underwriting guidelines and approval.