Top Tips for Invoice Payment Terms
There have been staggering statistics of invoices being paid late. In light of this, getting invoices paid on time is vital for your business for so many reasons, the most obvious being that it aids with your cash flow. Other benefits include, saving on time since you will reduce the amount of time taken when following up on debtors.
You will save money as following up on invoices can sometimes be costly to your business; and most importantly, you’ll get a good night’s rest knowing that you’re getting paid on time. If you’re a business-business company, you should consider moving on from traditional, printed and mailed invoices and hop on online invoicing.
There are a myriad benefits such as:
You Will Collect Your Payments Faster
Manually generated invoices typically take at least 30 days to be fully processed. Long gone are the days of snail mail. This lengthy payment cycle will impact your cash flow hence being detrimental for your business. Those 30 day terms have become obsolete.
You minimize Unsuccessful Payments
Incorporating online B2B billing system enables you to get payments electronically via credit card payments, business PayPal account payments rather than paper cheques. This way, you will immediately know whether your funds are available or on the way. If not, you can inform your client who will then use another card.
You Gain Operational Efficiencies
By setting up an online B2B billing system, you are reducing the work your finance and accounting team will take to manually generate invoices.
In light of the present global pandemic which has led to an economic crisis of great proportions, there has been an exponential rise of unpaid and late invoice payments. Below are some tops tips to ensure your invoices get paid on time:
#1 Discuss and Agree on Clear Payment Terms Before Getting Started
Invoice payment terms are vital since they include details such as; accepted forms of payment, the currency you deal in and late payment penalties. Getting this sorted in writing, ideally in the form of a contract will aid in managing both you and your clients’ expectations regarding the payment terms. This in turn eases your business operations.
#2 Invoice Out As Soon As Possible
You should prioritize invoicing in your business. You don’t want to cause delays. The sooner you send out your invoices, the sooner you get paid. Consider getting accounting software that will help you streamline the invoicing process for you.
#3 Ensure Your Invoice is Clear and Easy to Understand
You should avoid queries by ensuring that your invoice is accurate, straightforward and contains all information, not forgetting the purchase order number. Any confusion would create a payment lag due to the queries that would arise. You should also personalize your invoice with your business logo as it portrays professionalism.
#4 Address the Invoice to the Person Paying the Bills
This may not necessarily be the proprietor of the business or even the person you usually deal with, but you should always copy them when sending the invoices. In short send the invoice to the person who authorizes the payment and the one who processes it for efficient payment.
#4 Get to Know Your Client
Good business is based on good relationships. When you are amiable, your clients will fast-track their payments hence you won’t have to keep reminding them of their dues.
#5 Add ‘Overdue’ Fees
If your client fails or ignores your payment terms as stated on your invoice, you are entitled to charge interest in the form of overdue fees. This will generate some feedback from your clients but ultimately this will dissuade them from late payments. You may consider reversing the charge once the lesson has been learned.
#6 Follow up on Overdue Invoices Promptly
You can do this by sending reminders via email then making follow-up phone calls. It may seem like such a tedious task but this is essential in order to get paid as quickly as possible. In order to make it easier, call earlier in the day, preferably morning hours, call often and always remember to remain polite and maintain professionalism. Remember, don’t tire when chasing your payments. Don’t wait until an invoice is two weeks late before reminding your client they owe you. If you don’t have time for the follow up you may consider asking your accountant to do it for you.
#7 Include your Bank Details
Make it easy for your client by putting your bank details on your invoice. You may consider availing different options for payment such as online billing systems like PayPal. Such a wide array of payment options will make it easy for your client to pay on time.
#8 Adjust your Invoice Payment Terms
You may be time conscious but it can be worth the effort to get your invoicing set up properly. By having a streamlined invoicing process, you can drastically reduce the amount of time you’ll spend collecting your dues, hence efficiently enhancing your business operations.
#9 Maintain Detailed Records of Inventory and Time
Ensure that you have all your figures at your fingertips by keeping a running record of all the costs. This will ensure that you don’t miss anything, and if the costs are going over budget, you can inform your client. This will go a long way in preventing an expensive surprise for your client at the end of the month.
#10 Set a ‘read’ Receipt for e-invoice
If you decide to invoice your client electronically, consider setting a read receipt. This will be an effective way of getting confirmation that they have received your invoice even if they don’t confirm receipt. This is a very useful tip when you need to start chasing payments.
Now that you have these useful tips that will enable you get your invoices paid on time, all you need to do is streamline your business operations to effect change and growth. You should ensure you meet your clients’ deadlines so there will be no reason not to pay you even within a week.