When it comes to managing a business, invoicing is a vital part to get right. Having a smooth and streamlined invoicing process will ensure a great customer experience and improve your cashflow, so integrating it into your workflow is a must.
Although it may seem like a tedious task, an invoice isn’t just a demand for payment– it’s an important touchpoint with your client and presents an opportunity to strengthen and maintain your relationship. It’s also an opportunity to convey a positive message about your brand.
Here we’ve outlined how to ensure you get paid on time and how to avoid those unnecessary delays.
Ask for prompt payment.
The first step to prompt payment is communication. Make it clear when you expect payment as soon as possible to avoid any unnecessary confusion. You can also set payment terms and estimates in advance.
A good incentive for early payment could be offering a 2/10 Net 30 agreement, where customers receive a 2% discount if payment is made within 10 days, otherwise the full amount is due within 30 days.
Remember, you can also ask for quicker payment than the 30-day norm. To improve cashflow, try shortening the payment cycle to 2 or 3 weeks.
Send invoices asap.
Set the bar for prompt payment by sending your invoices quickly. The quicker you send, the quicker you’ll get paid! Waiting until the end of the month to send all of your invoices at once can create a dip in your cashflow, so ensure you send out your invoices as soon as the work is finished or the goods have been sent. Nowadays, online software makes this easy and seamless, and Xero will even connect to payment apps such as PayPal and GoCardless.
Make sure your invoices are clear, detailed and concise.
This might seem obvious, but a poorly worded invoice can be misinterpreted or even disputed by a client, resulting in late payment, so avoid using technical jargon or vague language. Tailor your language to the individual client and use the invoice as an opportunity to maintain your relationship. Simple mistakes such as misspelling a company name or asking for the wrong amount can also result in unnecessary delays, and look unprofessional, so ensure your invoices are clear and accurate. Always take the time to look them over thoroughly or hire a bookkeeper to do this for you.
Ensure your invoices have all the right information.
Avoid unnecessary delays by using an invoicing template. Key information should include:
- the date
- the company name and address of the customer/client
- a description of products/services purchased
- the VAT rate (if applicable)
- terms of payment
- your company’s payment details.
Automate and streamline the process as much as possible.
Making the most of bookkeeping software will save you valuable time and it’s a failsafe way to avoid unnecessary delays. Manual invoices are much slower to deliver and process at the other end, so utilise technology for a quicker and smoother invoicing process that’s less painful for you and your clients.
When it comes to getting prompt payments, online invoicing software will do the bulk of the work for you. With software such as Xero and GoCardless, you can send personalised, professional invoices using beautifully designed templates, and they’ll integrate with other project management tools to streamline your business and improve your workflow. Simply add your logo and your payment terms to the templates and send!
If you’re unsure which accounting system to choose, you can read our guide here.
Set friendly reminder alerts for payment.
Your accounting software can also notify you when payments are due and if they’re late. You can avoid the hassle of chasing late payers by setting automatic and friendly invoicing reminders.
Talk to your bookkeeper or accountant.
If you don’t have the time to manage your invoices, an accountant or bookkeeper can do this for you. A proactive accountant will help you grow your business using beautifully designed, online software, where both you and your accountant can view your transactions at a glance.
Found this blog post useful? Why not check out our 5 tips to be a badass bookkeeper.