As a business owner, it can be frustrating if your invoices are going unpaid for long periods of time. When weeks turn into months, the impact on your cash flow is going to become more and more pronounced.
The good news is that there are plenty of things small-business owners can do to ensure their invoices are settled in a timely manner. Here, we've outlined four of our best tips and tricks that can help you receive payments quickly.
Regular follow-up notes will automatically remind your debtor that an invoice is outstanding.
1) Send your invoices on time
Sounds simple, right? Well, many businesses end up hurting their cash flow by being too slow at sending out invoices to debtors. Even if they are using solutions like debtor finance, it still falls on them to issue invoices promptly.
Sending invoices promptly isn't just about your own cash flow either. You want to remain in your debtors' minds so they remember to pay, and the easiest way to do this is to send the invoice as quickly as possible.
A good tip here is to automate your invoicing so you reduce the risk of forgetting about payments on your end. Another useful strategy is to have regular follow-up notes that will automatically remind your debtor that an invoice is outstanding.
2) Take another look at your language
One of the problems that many businesses encounter is that they rely too heavily on financial terminology when formulating invoices, which can make debtors less likely to pay.
This was explored by accounting software firm Freshbooks. The company reported that changing terms like "payment terms: net 30" to "please pay within 21 days" actually made debtors more likely to settle the invoice on time.
The key here is to phrase your invoices so they are easy to read and as short as possible. By keeping it simple, your time-poor debtors can quickly absorb the relevant information and make a payment to match.
3) Incentivise early payment
If your clients aren't making payments on a timeline that meets your goals, you might need to think about offering something to entice them into payment.
You might want to offer a future discount or a non-financial incentive to your debtors.
A good starting point is to provide a small discount for payments made within a month of issuing the invoice. This discount doesn't have to be huge - just enough to give the client a good reason to settle the invoice.
Of course, there are other incentives you might want to offer that can achieve the same outcome. For example, you could provide a future discount or a non-financial offering to your debtors.
4) Expand your payment opportunities
For many years, enterprises have received payments from clients through business cheques, but now there is no shortage of alternative payment methods that might be a better fit for your company. Online payments, for example, have become incredibly popular, while accepting credit card payments for smaller invoices can also make a big difference.
The benefit here is that you will receive payments almost instantly, further easing the pressure on your cash flow. What's more, if you are working with clients on a regular basis, this might entice them to automate payments so that you don't have to worry about them overlooking your invoices by accident.
While long invoice payment times can harm your financial position, there are many different tactics you can employ to bring down these payment times. Putting this effort in early can ensure your relationships with debtors are smooth and that you are spending less time chasing payments and more time growing your enterprise.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].