Did you know that almost 50% of all invoices are paid late? If you’re a business owner, I’m sure you understand the struggles of late paying clients. There’s no doubt that late payments can damage your business’ cash flow, so the question we need to ask ourselves is: how do we balance both clear expectations with our clients and a great professional relationship?
It all starts with creating a strategic invoicing process that works for you.
Here are our top 5 tips for ensuring your clients are paying their invoices on time so that you can continue having a healthy cash flow:
1. Make sure you are invoicing as soon as possible
Keeping up to date with your invoicing is vital in ensuring your clients pay on time. If you can invoice clients straight after providing your service, this will ensure your value of work is still fresh in their mind. The faster the invoice is issued, the faster and more likely the payment will be received.
2. Keep a running record of your services and time
Working out all the costs at the end will slow the invoicing process down. Delayed invoicing will most likely result in delayed payments from clients. Keeping a ledger of all the services you are providing for clients will also assist in monitoring if your client has gone over budget, allowing you to notify your client in real-time rather than sending a larger invoice than they expected – ouch!
3. Set the correct expectations with your clients to begin with
Discussing your expectations when it comes to cost for service, due dates or payment methods upfront can save any confusion down the track. You can set expectations verbally, but having a formal quotation in writing will allow your client to have these terms on hand. As a result, they will be more inclined to follow these terms and that way there are no excuses for late payments on their end.
4. Send payment reminders
Sending your clients a payment reminder at least 24 hours before the due date, not only gives your client enough time to make payment, but it also can genuinely remind clients who have forgotten. Payment reminders are not demanding, they are friendly reminders to your clients that you are still a business owner who requires payment for services rendered. When invoices become overdue, sending a weekly email or making a phone call also allows your client to understand that you are serious about getting paid.
5. Consider diversifying your payment methods
There is no doubt that buy now, pay later methods are booming, and is something you can consider for your invoice payment methods too. Fee funding allows your clients to break up invoices over smaller and more affordable monthly repayments, and you get paid in full upfront by your provider, meaning fee funding is a win-win for both you and your clients cash flow.
If you are an accountant or lawyer that struggles with receiving invoice payments on time, SmartFee is a great way to diversify your payment methods. We are founded by accountants, so we understand the industry and appreciate the challenges that you may face, that’s why our service is at no cost to your firm.
Contact SmartFee on 1300 723 243 to find out more about how we can help you get paid faster, and on time.