Getting paid on time is a struggle that impacts many businesses. Here are ten tips that will help you improve your collection efforts and establish a steady cash flow for your company.
1. Strategic invoices
Invoices are a reflection of a company. They should clearly represent what is expected from the customer. Customers must find the invoice easy to understand with marked identifiers. Highlight the important details, like how much is due, when it is due, and where/how to pay. The ease with which a customer can review an invoice will affect the payment of said invoice.
Remember, always be professional by including “Please” and “Thank you”; it establishes respect and increases your chances of getting paid. Also, include the company logo as it adds to your credibility.
3. Gather all information
Make sure you have all relevant information about the client you performed the work for, as well as the details of the work performed. Ensure that the client’s name, job title, department, and email/mailing address are all correct to avoid having your invoice rejected. Also, be mindful of any specifics that your client might need, including invoice format, the inclusion of P.O. numbers, or proper approvals. This can help avoid unnecessary delays.
4. Clear-cut due dates
Clearly identify the due date to avoid confusion about when payment is expected. Interestingly, the placement of the due dates on the invoice matters. Eye-tracking research found that customers usually pay more attention to the left side of the page; therefore, reduce the odds of having unseen due dates by being wise about its location on the page.
5. Personalized payment terms
Perform some simple research on your customer regarding their payment history and establish suitable payment terms on an individual client basis. Performance and payment terms should be agreed upon in writing before providing services to ensure that both the client and the company’s expectations are met.
6. Send invoices promptly
The quicker the invoice reaches the client in relation to when the service is provided, the sooner they can begin processing for payment. Habitually sending invoices immediately after services/goods are delivered prevents companies from rejecting them due to time lapsed.
7. Electronic invoices and payments
Studies show that paperless invoices and payments are much more efficient for businesses than paper transactions. They reduce costs due to the lower administration strain in processing and save a lot of time — no more waiting on physical signatures to be obtained and significant time saved avoiding the mail system. Almost every accounting system has an embedded option to send invoices electronically.
8. Late fees
Make sure to include late payment penalties in your invoice to demonstrate that being late has a price— no one ever wants to pay more. However, make sure this is included in the payment terms that are negotiated in writing with each client.
9. Past due clients
It’s the company’s responsibility to regularly communicate with clients who are past due – there is a reason the invoice hasn’t been paid, and the client is unlikely to reach out proactively. Confirm whether the invoice was received and resolve any issues the client may have to ensure the payment is expedited.
10. Monitor cash flow
Keep an eye on the company’s cash flow and decide what is best for the business. Customers may need to pressed for payment, or additional financing options may need to be explored. For example, invoice factoring is an excellent way to stimulate cash flow and get assistance with collecting on the back end.
TXP Capital is West Texas’ premier factoring company. We understand the importance of keeping your business moving. Contact one of our experts today.