Ensuring invoices are paid faster in 2018
January 16, 2018
My new year’s resolution is to: Get paid faster
Cash is necessary to the survival of any small business, and the sooner you can receive it – The better! Of course, as soon as money is received, it will leave your account almost instantly to cover the cost of your payroll and to pay bills, but once done what’s left is yours.
The success of your small business is dependent on prompt payment, and according to a recent study:
- 60% of invoices are paid late
- More than a third are at least 2 weeks late
However, there are steps that can be taken to ensure that your small business gets paid on time. Here are our top tips:
1: Ask for retainers and prepayments. Be bold. Could you make it your business policy to get paid upfront? To encourage this ideas amongst your clients or customers, you could consider offering discounts, or priority service, for customers who prepay. Once you set your policy, there is no need to be aggressive to collect payment; simply state your policy. If you need to warm up to the idea, realise that you can leave room for flexibility. Perhaps, your policy starts with a set amount of hours prepaid. If your customer isn’t willing to prepay for e.g. 10 hours, you have room to negotiate a smaller block of prepaid time.
2: Collect immediately at time of service or delivery. Before you leave, ask your client or customer for payment. One huge benefit of QuickBooks is that you’re able to send an invoice within seconds from your mobile phone. Before you even leave, you can raise a customised invoice which can be emailed directly to the client or customer within seconds of it being created. Also, if you’re unsure about introducing retainers and pre-payments, then make immediate collection a policy and let your clients or customers know in advance. In order to carry this out, why don’t you consider using a credit card reader? For example, QuickBooks GoPayment, or even Paypal?
3: Send invoices electronically. Know your clients or customers. What will work best for them? Is mobile the best way to bill them? Save time and money by emailing rather than posting invoices. Ensure that your invoice makes sense, clearly shows the total amount due and the due date and make sure that your invoice includes the name and address to remit to. To streamline the process, you can set up a customised and branded template within QuickBooks meaning you can raise and send your invoice in seconds.
4: Encourage customers to pay by electronic transfer. Invite customers to join payment networks that link to your business, such as QuickBooks Payment Network or the Bill.com Payment Network. These are less costly for you than credit card payments and their associated fees. Give your customers the opportunity to learn how easy electronic transfer is. It saves time, speeds collection and is convenient – customers can pay anytime, anywhere. Add the payment links to your electronic invoices and you’ve made things easy.
5: Follow up. Confirm that your customer has received your invoice. Check with the customer within 48 hours after emailing invoices (or within 4 business days if you mail invoices). Avoid making your first follow-up call later; late follow up contributes to payment delays. Create a thorough procedure to regularly review receivables and make collection efforts. Assign collections to someone on your team who is conscientious and can maintain a good rapport with your customers.
From having the ability to customise a branded, professional template that can be used time and time again, and having the ability to produce and email invoices within seconds from your mobile phone, it makes the whole process much simpler.
QuickBooks can help assist you with running your small business. To sign up for your free 30-day trial, click here!