Does your company rely on sending invoices to get paid? If so, here are a few important invoicing tips that could be worth following to make sure that you get paid promptly and accurately.
Itemise your invoices
While your invoices should include a total amount, it could be important to break down all the individual costs in each bill so that your customers know exactly what they’re paying for. Itemising your invoices can prevent disputes over ‘hidden fees’ by making any small extra expenses like VAT or cost of parts clear. Just make sure to quote these fees upfront too.
Set clear payment terms
If you’re too vague with payment terms, it can make it much easier for customers to take advantage of you. Make sure to set a clear payment deadline – such as ‘30 days from the invoice date’. Better still, supply an actual date by which you want your invoice paid by.
Consider late payment charges
Charging customers late payment fees can prevent late payments. You could charge an interest percentage or an additional fee for every month/week the invoice is not paid. Whatever system you choose, make sure that it is clearly written in a contract that the customer has to agree to.
Accept multiple payment options
Late invoice payments can be due to many different reasons, but one common reason is lack of payment options. Some clients may prefer to pay by bank transfer. Others may want to pay by debit card or even credit card. You could even want some customers wanting to pay by cheque. Consider expanding your payment options if you notice that clients are asking about certain payment methods that you currently don’t offer.
Automate your invoices (and any follow up reminders)
If you often forget to send out invoices or send them out later than planned, it could be worth switching to an automated invoice system. You can automate B2B invoicing with PayTrace and other similar programs. It’s also possible to automate payment reminders before a deadline, and late payment notices as well as subsequent reminders. This can make chasing up late paying customers less of a chore.
Give each invoice a number
If a customer is still yet to pay two or more invoices, you may need to clarify exactly which invoice you need paid first. A good way to do this is to give each invoice a number so that you can refer to this number when chasing up late paying customers. This can reduce any confusion as to which invoice needs to be paid first.
Know when to explore invoice factoringWhen customers don’t pay you, it can have a knock-on effect on your ability to pay your own suppliers. Fortunately, it is possible to use invoice factoring to cover some of your unpaid invoices. This is when a finance company pays you some of the money you are due and then continues to chase up the invoice from your late paying customers. When your customers eventually do pay the invoice, it is then paid directly to the finance company. While this does mean that you don’t receive all the money you are owed, it does mean that you get paid something immediately (usually 90% of what you’re owed) rather than having to wait weeks or months for late paying customers to cough up the full amount. This guide at Funding Options explains more.
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