We want to talk to Founders and Managing Directors of companies that do client work If you provide services, you have likely experienced invoice-clearing delays at least once. In this article, we will present you with project management tips aimed to help fast track invoice payments before it becomes an issue.
Late invoice payments are the bugbear of many small businesses. The problem is that many SMB owners depend on payments being made on time to keep their cash flow in check. It is something that may not be so important for bigger businesses with bigger financial safety nets.
In fact, for some businesses, a few late payments at once could cause dire straits and have a serious knock-on effect. They may struggle to pay their suppliers, their people or any contractors on their books. In this article, we have a set of tips on how to fast-track invoice payments.
Top Tips to Get Invoices Paid Quicker
Here are 7 tips to fast track invoice payments:
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Agree on payment conditions before you begin the project
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Stay diligent with your inventory and time records
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Don’t overcomplicate invoices
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Establish direct communication with the payer
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Don’t delay invoicing
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Remain persistent
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Introduce additional fees for late payments
Let’s discuss each of them in greater depth.
1. Discuss Payment Conditions at the Get-Go
Be totally transparent from the beginning by outlining clear and definite payment conditions. Often delays in pay occur out of poor communication and not out of malice. In other words, to avoid expense-bearing confusion later down the line, aim for maximum clarity.
Informing the client of payment conditions prior to starting the work also sets and helps to manage the expectations. Even better, get an SLA (service-level agreement). Make it outline deadlines for the invoice to be cleared. This is also the best time to inform them of the possible consequences. For instance, late payment fees in the event of a breach.
2. Keep Running Inventory and Time Records
You’ll waste time by working out costs at the time of invoicing. Instead, keep a running record. This will mean that figures will be instantly available as and when you need them. It’ll prevent anything from being missed, too.
A good solution for this approach is Timesheet Portal. It automatically pulls all the information logged into the software and generates custom invoices based on the information you’ve recorded.
If you notice that costs are going over budget, keeping a running record means you can inform the client straight away. Not giving them a nasty surprise at the end of the month may salvage a relationship.
3. Simplify Invoices
Set things out plain and simple for the client on the invoice. Any confusion could stall payments. Personalising the invoices with your business’ logo and brand colours will help you look professional, too.
The good news is that it won’t cost you a limb in paying a designer to create an invoice template. Or, if you have an in-house specialist, you won’t have to burden them either. The invoicing function included in Timesheet Portal software allows you to customise invoice templates to match your corporate colours and layouts with just a couple of clicks.
4. Address the Payer Directly
Very often the payer and the person who ordered the work are different people. Your invoices might have simply been lost somewhere along the way to the person responsible for accounts. Depending on the size of the account, it often has a high probability.
The way to fast track invoice payments is to reduce the number of steps taken and the people involved. Instead of sending invoices to your point of contact, send them to the one responsible for paying. If unsure, simply give your client a call. Request the contact details of the person in charge of the accounts and continue communication with them.
5. Invoice ASAP
Invoices that are sent out fast tend to get paid fast. Simply put, when your client is invoiced shortly after the delivery of your work, it’s still fresh on their mind. It then has a lesser probability of being forgotten or postponed.
We understand that putting an invoice together can be a task you don’t always have time for. That’s why Timesheet Portal has a feature for both, generating and sending invoices out on your behalf. In other words, neither of the parties is left with an excuse for why invoices have not been sent out or cleared in the shortest time possible.
6. Be Persistent
Persistence pays off! When invoices are overdue, send reminders and monthly reminders. Failing this, pick up the phone to speak with the client’s accounts department. However, no matter how upsetting the situation is, keep your tone professional. While you should issue warnings, avoid making threats.
Remember - a relationship is a two-way street. The foundation of it is trust and both parties are required to pour an equal amount of effort into nurturing it. If the client regularly misses payments, you should consider whether this relationship is worth your time and effort.
7. Add Late Payment Fees
If you’ve been transparent about your payment terms on your invoice and the client has still ignored them, you can charge interest in the form of late payment fees. However, remember to include a warning they may incur your SLA. Always be backed up by written proof of the client’s acknowledgement of the possible consequences.
Be warned, though. This can severely damage the relationship you have with the client. It’s best to analyse the situation. If it’s a one-time offence with a good reason and there were no issues in the past, consider reversing the charges.
Summary
Late invoice payments happen to every business that provides services. The problem is that while big organisations may not feel it, to SMBs this can be a crushing experience. What’s more, it often results in further issues down the line.
The best way to fast track invoice payments is to do all that’s in your power to create the right environment. The key is to prevent them from happening in the first place. From writing SLAs to informing clients of late payment fees to trusting invoice generation and distribution to software. You can take control of this matter.
Not sure where to start in addressing serial late-payers? Get in touch, we’ll guide you in the right direction.
