Invoices. They’re the fall back of many companies, but they can also be the bain of your business life. Unlike companies who get their money straight away, those relying on invoices often have to wait for payment. What’s more, they usually have to fork out on materials before seeing a penny of profit.
But, invoicing is the only way to keep many businesses thriving. This is especially the case if you offer services which require a lot of materials and hefty payments. Construction companies and the like just wouldn’t be able to get by without this system.
But, invoices aren’t flawless. As we’ve mentioned, they require you to fork out for materials before receiving anything. What’s more, it isn’t unusual to have to wait an average 21 days for payment. When a business generally only has 27 days of cash reserve, that doesn’t leave much room for error. What’s more, many customers fail to pay. In fact, an article on Entrepreneur suggests small businesses are waiting for an average $84,000 in unpaid invoices.
As bleak as this picture may seem, it’s crucial to note that there are ways to ensure you get paid. And, we’re going to look at some of them here.
State an expected payment date on invoices
Too many companies leave invoices open-ended. It’s easy to assume a customer will pay within a few days. But, that assumption makes an ass of you and me, because customers may not be on the same wavelength. And, you won’t have a leg to stand on if they don’t pay within the period you’re expecting.To avoid confusion, state the latest payment date you’re willing to accept within the invoice. Make it clear you’ll take payment before, but you’re willing to wait that amount of time. That way, you can make entirely certain you have your money within the 27-day period.
Take it digital
Given that everything else is going digital, it’s surprising how many companies still use paper invoices. In many ways, this is due to convenience. Going digital does mean getting customer details and transferring existing invoices. But failing to take this step could cost a lot. Physical invoices can get lost, forgotten, or fail even to arrive with a customer. When you make things digital, you can automate the process of sending, and even automate friendly reminders. What’s more, transferal doesn’t need to be a bother. Companies like Datamation can take care of it for you, making the task of managing documents simpler with no effort on your part. Unpaid invoices could well become a thing of your business past this way.
Offer payment incentives
It doesn’t hurt to put an incentive in place to pay on time. We’re not saying you should offer early-payment discounts to every customer. That’d soon leave you out of pocket. But, something like a small gift could ensure a better response time. It may also be worth introducing late payment penalties. These will make sure your customers don’t slip into late-payment habits.