fbpx

5 Best Practices to Get Your Invoices Paid Faster

Unpaid invoices can severely impact a small business’s cashflow. While your company may look profitable on paper, if you’re frequently dealing with clients who pay their invoices late, you’re eventually going to struggle to make payroll and pay your operating costs.  

Here are 5 best practices to help get your business’s invoices paid faster:

  1. Don’t Wait to Send Invoices
    Your best chance of getting paid is immediately after a job is done or once items have shipped. If you wait to send an invoice until weeks or months later, you are no longer top of mind for your customer. While some smaller businesses may dedicate one day per week or month towards doing all of their invoicing, that method isn’t conducive to receiving prompt payments. Instead, consider using invoicing software that can send automatic invoices as soon as you’ve finished a job or shipped an order. 
  2. Make it as Easy as Possible for Customers to Pay Their Invoices
    If you haven’t clearly spelled out how your clients can pay you and made it easy for them to do so, chances are it is going to take longer to get paid. The easier you make it for them to pay, the sooner you will receive payment. Be sure to offer online payment options such as credit card and debit card payments, PayPal, and bank transfers. Your customers will appreciate the convenience of being able to pay online and the flexibility to choose their preferred payment method. 
  3. Consider Breaking Large Invoices into Several Smaller Ones
    Progress invoicing is ideal for those projects that span a longer period of time or are made up of multiple phases. It’s common in the construction industry and helps a company maintain a consistent cashflow. Progress invoicing also benefits customers since they’re not required to pay a large sum of money all at once. 
  4. Incentivize Early Payments
    Incentivize customers to pay their invoices early with an attractive discount. Make sure to remind your clients about the option to pay early and save money both before and after you’ve invoiced them. Conversely, it may be helpful to implement a fee on late payments. This will help cover any incurred costs of chasing down payments such as hiring a collection agency. 
  5. Follow Up with Reminders
    When you first engage with a client, it’s important to gather the proper information to ensure that your invoices are sent to the right person and the correct email address or physical address. Use very clear language on your invoices so there is no doubt of what the payment terms are and send reminder emails periodically. As an example, if your payment terms are net 30, send automated reminder emails 15 days after you’ve sent the invoice and the day before the payment is due. Once an invoice is past-due, you should be sending frequent automated email reminders at 1 day, 7 days, 10 days, and 14 days past-due.  

How to Handle Past-Due Invoices

Overdue invoices can quickly pile up. If your company is struggling with multiple overdue invoices, here are a few tips to help you handle them:

  • Once you’ve sent several email reminders, reach out with a phone call. If you get through to someone, be ready to accept their payment over the phone.
  • Have a lawyer draft a demand letter on your behalf that you can send to customers whose invoices are past-due.
  • Hire a debt collection agency to assist you with getting your overdue invoices paid. 
  • Consider invoice factoring to cash out on all your slow paying debtors. Fundible will purchase your invoices so you can get back to running your business with a full bank account.
  • Secure a business line of credit that you can use any time you’re waiting to get paid. Whenever cash flow is tight, a business line of credit will allow you to have immediate cash at your fingertips day or night.

Want to learn more about invoice factoring or one of our other programs? 

If you’d like to learn more about how our programs can help your business, contact us today at (855) 784-0008 or apply today to get started!