Top 5 Most Crucial Tips to Get Paid on Time
As a business owner, managing cash flow is one of the most critical challenges to master.
Being an effective leader and running your business productively can result in a healthy profit margin. However, without an effective invoicing system and steady cash flow, your business is likely to fail. In fact, 82% of small businesses that fail do so because of cash flow problems.
That’s why we’re sharing our top 5 most crucial tips to get paid on time to help you invoice your way to success.
The Benefits of an Invoicing System
Save time, postage, and stationery costs by switching from a manual invoicing system to an electronic one. Not only will lost checks become a thing of the past but also you can create electronic bills or, set-up recurring payments online. Don’t forget, you can also generate payment reminders.
Finally, despite the fact that your invoicing system is online, you should keep it personal with your customers. When it comes to payment: talk, don’t text or type!
Design a Professional Personalized Invoice
Design matters. An invoice represents you and your company and as such should mirror your brand. A professionally designed invoice can set you apart from other organizations, command authority, and help to improve cash flow.
It really isn’t as difficult to create as you may think. The majority of invoicing software packages will provide you with a ready-made invoicing template.
Ideally, your invoice should include:
- Your Company’s Logo and Corporate Colors
- Invoice Number
- Due Date, Payment Terms, and Accepted Payment Methods
- Contact Information
Early Payment Incentives and Late Payment Penalties and Plans
While some customers may be experiencing their own cash flow problems and are unable to pay, others may intentionally withhold payment.
It’s advisable therefore to come up with a system to encourage customers to pay your invoice on time without you having to chase payment.
Consider discounts for pre and early payment. Then apply a penalty for late payment, and offer payment plans for existing customers with temporary cash flow problems.
Payment Terms and Policy
Your method of payment and terms can affect how quickly your invoices will be paid and subsequently improve cash flow.
Not only do you need to be polite and professional in order to nurture long-term businesses relationships but also you need to;
- Agree on invoice payment terms at the outset
- Instead of 30 days payment terms, consider a shorter term of 14 days
- Clarify the methods of payment you accept e.g. cash, check, credit card, bank transfer, etc.
- Make it easy for your customers to generate online payments
When invoicing, always be respectful. It’s more difficult to ignore an invoice from a polite and professional supplier who writes, ‘please pay within 14 days’!
Don’t Do it Alone!
Time is money and hours spent setting up an invoicing system or chasing a non-paying customer is not a productive use of your valuable time. It can take you away from the important matter of growing your business.
Know when to employ a third party for help and get the cash flowing!
- Consider employing a part-time or full-time bookkeeper to help with your invoicing
- Check out an invoicing software expert to set up your system, train staff and/or offer software solutions
- Speak with credit agencies who can give you the information you need to set up lines of customer credit
- Talk to debt collection agencies and attorneys about their collection services
- If you sell to an international market, you may also need to make contact with an overseas debt collection agency/law firm
Late payments can be frustrating and detrimental to your business’ growth. However, it can be difficult to achieve a healthy balance between ensuring payments are on time and keeping your customers happy.
These 5 most crucial tips to get paid on time will enable you to do both, so that you can concentrate on what you do best; managing and developing your business.
Source: 1 Jessie Hagen, Vice President of US Bank.