Xero's Small Business surveys show that almost half of invoices are paid late. Late payments are one of the most frustrating things a business can face.
Here are 6 tips to get paid faster.
- Review and adjust your payment terms and pricing - Think about how much time you give customers to pay you - can you shorten that period? Close to 75% of invoices ask for payment within 2 weeks, so expectations are changing. How about an early payment discount to encourage quicker payment - would that work with your customers? If you haven't reviewed your payments and pricing in a while, we can help you put a schedule into place. Remember to communicate your changes to your customers.
- Get insight and data on your customers - Before taking on any new clients, make sure you can trust them. You can now view a company's credit report to make sure they're legitimate and check their non-payment history. If you know who you're dealing with you can set the terms and be more confident that you'll receive payment when you request it.
- Invoice as soon as possible - Send your invoice as soon as possible, the sooner a client receives an invoice the sooner they will make payment. It also means they will receive it when the value of your work is still fresh in their mind. Accounting software that lets you create professional recurring invoices will streamline the invoicing process.
- Get in touch - Don't wait until an invoice is two weeks late before reminding a client they owe you. Send a friendly email as the due date approaches. Follow up again if they go past due. Using invoicing software means you can set automatic reminders. If you still get no response, make a friendly call.
- Make your money work for you - Even after optimising payment terms, you might find you still have a cash flow gap. Tools like an overdraft or financing that can help you bridge that gap.
- Give your customers more ways to pay - Make it easy for customers to pay you and they might do so faster. Offer online invoices that let clients 'pay now' from within the invoice. There's also direct deposit and credit card capability that's simple to set up