5 Strategies to Ensure Your Invoices Get Paid
How do you make sure that your clients pay on time? That is a commonly asked question that's not easy to answer. There are several factors to consider, such as the size and profile of your clientele, their payment terms, and the nature of the contract. However, you can take a few steps to make sure you get paid on time.
Here are some tricks to consider to ensure that you get your invoice paid as soon as possible.
Strategy #1: Ensure That You Have Clear Payment Terms
Make sure that your payment terms are clearly stated. These should include the due date of your invoice and any discounts for early payment. If you have separate contracts for individual projects, make sure that these include a payment date.
It is a good idea to include payment terms in your contract. However, you'll want to be sure that the terms are reasonable. Obviously, you do not want to include words like "Cash on Delivery" or "Net 30," particularly if you have a smaller client.
Also, consider the size of the transaction. Will your clients' payment terms impact the jobs you do for them? If so, you might need to renegotiate the payment terms or consider another client.
Strategy #2: Set Payment Term As Short As Possible
If you have a large client, you might consider setting the payment term to "Net 30" or "Net 45". You might also consider making your payment terms dependent upon the size of the order. This can help you ensure that your clients make payments on time, even after delivering a large project.
Try to set payment terms as short as possible, especially when dealing with larger clients. That gives you the most time to collect your in-hand revenue and collect interest on it. You might consider terms of 10 days or less for your bigger clients.
Strategy #3: Prepare Your Invoice as Soon as Possible
Make sure that you have your invoice prepared as soon as possible. The invoice needs to be timely and contain all necessary information, including your bank details.
It is also a good idea to have a template for your invoices for their fast creation. That will ensure that your invoices are consistent from job to job and that you have all the necessary information that your client will require.
Quickly preparing your invoice will make it easier for your client to pay on time. You can also issue the invoice early to ensure that your client is prepared to pay when the invoice is due. At the end of the day, make sure to remind the client when the invoice is due.
Strategy #4: Learn How to Follow Up
Following up with your client is a good idea. It can help you remind them of their invoice, but it can also renegotiate payment terms. Often, a simple phone call or email is enough. Be polite and respectful in your communication. After all, this is a large client, and you want to avoid alienating them.
Strategy #5: Set Overdue Fees
If your client is slow in paying, you might consider setting an overdue fee. It is a fixed amount per day that the invoice is past due. You might also consider charging interest on the current balance (if the client's payment terms allow it).
It is essential to be reasonable when setting an overdue fee. If you're dealing with a large client, you might want to charge a couple of pounds per day. These are usually enough to get your client's attention.
Invoicing, billing, and collecting payments is one of the most challenging parts of the business. However, it is crucial to take the time to understand and implement the best policies possible. Setting the right terms, issuing the invoice quickly, and following up with your client will make it much easier to collect your payments on time.
If you tend to encounter these concerns, it might be best to consider acquiring accountancy services for businesses. 1 to 1 Accountants are an accountancy firm based in the UK, specially made to cater to freelancers and small businesses. Talk to us today to learn more about how we can help.