A healthy cash flow is the lifeblood of every small business.
However, when embarking on a new venture, many small business operators learn that getting paid isn’t always as simple as sending an invoice.
Here are our tips for getting paid faster:
- Finalise payment terms first
Discuss payment terms with your client before starting work, so there’s no confusion or disagreement once the work has been completed and payment is due.
- Provide logical invoices
Make your invoices clear and easy to understand by replacing jargon with lay terms. This makes reconciling the invoice much easier for your client and reduces the likelihood of late payment.
- Know your numbers
Keep detailed running records of inventory and time spent working with a client, so this information can be easily accessed when required. This way, you’re less likely to miss something and over or undercharge.
- Send to the correct person
Ensure your invoices are sent to the correct person in the organisation. For example, the accounts team in the organisation may need to receive the invoice and process payment instead of your day-to-day contact. This way your invoice will be sent directly to the person arranging the payment.
- Avoid delays
Send your invoice as soon as possible after the work is completed. Delays in supplying an invoice will mean it takes longer to receive payment.
- Consistent communication
Stay in touch with your debtors to avoid invoices falling into arrears. If you follow up with clients, they are more likely to pay on time. Some accounting software allows you to automate this process and send clients a payment reminder when their invoice approaches or passes the due date.
- Penalise late payment
Consider including overdue or late fees in your payment terms, so clients can be penalised for not paying invoices. Businesses are entitled to charge a reasonable interest for late payments. If a client knows they’ll be charged overdue or late fees, they may also be likely to pay on time.
For support setting up your business’ invoicing procedure, contact us on email@example.com or (08) 8172 1444.