Getting your invoice paid faster is the most important goal for both small business owners and freelancers. This is the fastest way to having positive cash flow, which is very important for a business’s sustainability.
However, getting your invoices paid on time can be quite difficult. As one report showed, small businesses have to wait 72 days on average to get their invoices paid. That is more than two months from the time the invoice was sent, and in that time, there are bills, employees, and many other business expenses need to be paid.
Today we’ll look at how you can make sure you’ll get paid faster every single time you send your invoice.
The most important thing to get paid faster is to take care of matters in your own business. This means that you’ll have to get organized in terms of your documentation processes.
It is important to get organized in general to take care of your freelance or small business finance. One of the best ways to do that, when it comes to invoicing, is to automate your processes. You can do this by using online invoicing software.
One big problem with using paper invoices or invoice templates is that you have to search for your client’s information every time. It may be stored in your email folders, on your computer, or in a binder in your office. However you store it, when you create your invoice you have to look for it. This is not only time-consuming; it can also lead to lost or incorrect information.
Online invoicing software solves that problem. Because all the information is stored on the cloud, there’s no need to look for your client’s information. Also, it’s online, so it’s possible to create and send an invoice anywhere as long as there’s an internet connection.
Specify your payment terms
Another important thing is to clarify with your clients before you begin your work or sell your product what your payment terms are.
These payment terms will include:
- the currency and kinds of payment you’ll accept
- how the payments should be made (if by bank transfer, PayPay, credit card, etc.)
- what late fees will be added
- the amount of time given until payment is due
For the last important, it is very important not to set your due date for the standard 30 days. It really is an outdated convention. Instead, you should be setting your payment due date to 14 days maximum. Clients are late on average by two weeks, so if you set your payment terms earlier, you’ll get paid much faster.
This will be greater pressure on your client to have your payment processed, seeing as there will be a late fee added onto the bill.
Be prompt and follow up
One important truth is: the faster you send out your invoices, the faster you’ll get paid. Sending out invoices late (by days, weeks, or even months) is common among many smaller businesses or freelancers who are just too busy and unorganized.
However, there should be a system in place to get these invoices out as quickly as possible. One trick is to schedule a few days at the beginning or end of the month, consistently, where you do all your invoices for the previous month.
This is of course easier with online invoicing software, which will generally allow you to create and send invoices in about a minute.
Beyond that, you’ll need to be vigilant in following up on late payers. Clients pay late for many reasons, but usually it is innocent: they simply forgot. Therefore, it is important for you to stay on top of your finances.
Send a polite email reminder as soon as your client’s bill is due. Make it short, direct, and most importantly polite. If the invoice is still not paid after a week or more, call the client directly. You should still be polite, but get straight to the point so as to avoid confusion.
With these tips, you’ll see definite improvements in how quickly you receive payment. You’ll not only get paid faster every time you send an invoice, but you’ll also increase the professional relationship with your client and boost your own cash flow.