This article is written by our friends at FreshBooks.
But what if you didn’t need to wait for month end to get paid? Try these five tips to help you get paid faster (and more frequently).
1. Use a Consistent Invoice Template
Many small business owners face delays in payment. This can often be attributed to some pretty common invoicing mistakes like sending the invoice to the wrong person, not specifying the payment terms or failing to include the PO number.
Providing clients with the information they need to act is crucial to getting paid on time. And if your clients don’t fully understand what they’re being billed for, they’re even less likely to sign-off on the invoice.
Include these 5 key elements on your invoice to ensure timely payments:
- Date of issue or invoice date
- Payment terms so that your client knows how many days after the issue date they have to pay
- Due date that makes it clear when you expect to be paid
- Invoice number to help you track your invoices sequentially
- Amount due so that your client knows what to pay
With the right invoicing software template, you can be sure that you’re providing a consistent experience for your clients. Look for fully designed professional-looking templates that include all these above elements and more. You’ll spend less time adding fields on and more time billing and getting paid.
Plus, a template helps keep you accurate, so you can avoid any of those pesky invoicing errors. And inaccuracies mean—yep, you guessed it—delays.
2. Consider Your Payment Terms
All invoices have payment terms listed (or at least they should) so that clients know how many days after the issue date they should pay the invoice.
Have you given any thought to your terms? You might be surprised just how much they can determine how fast you get paid.
For example, using net terms on your invoice can prompt action. In most cases, business owners will give their clients 30, 60 or 90 days to pay, also known as giving net-30, net-60 or net-90 terms.
FreshBooks recently studied its users’ payment terms in order to find the best invoice terms to help you get paid faster. (Check out the full report here.)
We found that using exact net terms like “21 days” on invoices seems to motivate clients to pay on time because it conveys a specific timeframe. In contrast, terminology like “n/30” might be harder for some clients to decipher.
If you’re sending clients an invoice with no timetable on it, how can you expect them to pay on any predictable schedule? Keeping your payment terms clear and consistent helps eliminate the risk of getting paid on someone else’s schedule, instead of yours.
3. Enable Online Payments
Chasing clients for payments. Checks “lost” in the mail—again. Constantly making bank runs.
There’s no doubt about it. The process to get paid is cumbersome.
Not to mention all the time and effort you spend trying to get paid—valuable time you could be dedicating to your projects instead.
Luckily, there’s a better way with online payments. By enabling online payments via credit card, ACH (Automated Clearing House or bank transfers) or PayPal, you can provide your clients with an easier way to pay you.
What makes online payments so compelling?
- Convenience. People are busy and tasks like paying invoices can easily fall off their radar. When a business allows them to pay on the spot, ideally straight from an invoice, it empowers them to take care of it immediately, so it never even makes it on their to-do list.
- Choice. While some businesses will always prefer to pay by a check issued by the payroll department, others, especially individuals, appreciate an option to pay with their favorite credit card which they use to collect points. The more choices you offer, the faster they’ll pay—and the better they’ll feel about it.
Not convinced yet? A recent FreshBooks report shows that business owners can get paid twice as fast by enabling online payments. With a win-win scenario like this, what are you waiting for?
4. Add Late Payment Reminders (And, Maybe, Fees!)
Every business owner has been there. You’re counting on a big client payment to come through at the end of the month—and it doesn’t. A week passes—and still nothing comes through. After two weeks, you know it’s time for that difficult follow-up conversation.
Avoid the awkward phone call by using technology to put your invoicing on autopilot. There are lots of tools available that offer automated late payment reminders that will be sent to late-paying clients on your behalf at predetermined intervals using a script you’ve pre-written.
In addition, an overdue payment fee can help establish you as a serious professional who has a business to run. Without a late fee policy, the perception may be that a client who doesn’t pay on time can repeat this behavior in the future.
Plus, it encourages clients to pay you before other contractors. If you have strict payment policies, you can be sure they’ll prioritize the payment with fees attached and move it to the top of their pile.
Need some help? FreshBooks’ Automated Late Payment Reminders allows customers to pay straight from the reminder notice—with just one click!
5. Say Thanks
Although it’s easy to forget sometimes, politeness and showing a bit of gratitude goes a long way when you want to get paid.
It’s also an important part of your client relationship. One of the best ways to build strong client relationships is to be constantly communicating with them. That way, when it comes time to invoice, there won’t be any surprises.
The language used in your invoice should reflect the professional working relationship you have established with your client. These human touches are a friendly reminder that there is a person (you!) behind the invoice.
A FreshBooks study showed that a simple “please pay your invoice within…” and “thank you for your business” can increase the percentage of invoices that are paid by more than 5 per cent—not bad.
That could easily equate to thousands of dollars per year. Plus, politeness not only gets you paid faster—it’s good for your brand and image. Who doesn’t like working with someone who’s polite and professional?
Preparing, sending and following-up on invoices may not be your favorite business task, but it’s the only way you can make sure you get paid for the great work you do.
After all, your bottom line is just as important as whatever problems are causing the delay in your payment. You’ve earned payment and deserve to receive it.