For companies or trades, few things are as frustrating as unpaid or late invoices. Not only does chasing invoices create stress and use up valuable time, but it also impacts your balance sheet, and may put strain on client relationships.
While it’s impossible to guarantee timely payment of all invoices, there is a lot that a business can do within its finance function to get invoices paid faster.
Here are some of the Genus team’s top tips:
- Agree payment terms in advance
- Make payments quick and easy to make, with a variety of options (including online!)
- Automate invoice reminders and/or chasers
- Consider discounts for prompt payments
- Charge fees or interest for late payments
- Be wary of spam filters
- Obtain ethical debt collection assistance
1. Automate your invoice reminders/chasers
The reality is that you will need to chase some invoices, sometimes regularly. Chasing invoices can be a time consuming and frustrating process for you or your finance team. A smart way to deal with this is to take full advantage of automation.
Business finance software such as Chaser, as the name suggests, allows you to set up and issue automated email reminders to any customers who are yet to pay their invoices. These emails can be fully customised (so that they don’t look automated) and scheduled for specific dates relative to the invoice due date. One way to get invoices paid faster is to send an advanced reminder before the due date.
2. Watch out for spam filters
When dealing with emails, it’s important to remember that some people’s email service provider (ESP) may take issue with email attachment and incorrectly mark your invoice as spam. This can happen to perfectly legitimate emails depending on how sensitive the client’s email provider’s security is.
To get your invoices paid faster, consider requesting receipt confirmation from your client. We also advise you to ensure your client whitelists your company’s email domain at an earlier time.
3. Make payments easy and provide multiple methods
Just as technology has enabled multiple payment methods in-stores, be it cash, chip and pin, contactless or Apple Pay, it has also made it easier for companies to get invoices paid faster. The easier an invoice is to pay, the less likely a person is to leave it on the to-do pile.
GoCardless, for example, is a superb tool which allows customers to automate their own invoice payments by direct debit, meaning they only need to set up their payment details once.
Furthermore, Stripe gives customers a clear and user-friendly payment journey direct from their digitally received invoices, so they can make secure online payments effortlessly.
4. Set clear payment terms and due dates in advance
While your client is obligated to pay your invoices in a timely manner, as a business, it is your responsibility to ensure all payment terms are clear. This includes the invoice due date.
Ideally, your invoice due date should be as unambiguous as possible. For example, if you want timely payment, do not give a broad window of time (such as “within the next week”). Give them a specific date by which the invoice must be paid, and ensure the language is clear and unambiguous.
5. Reward prompt payments and issue fees for late payments
Another useful method for get invoices paid faster is rewarding clients who consistently pay on time. This could be a small service discount applied to a bill if it is paid before the due date.
Conversely, you may also include late payment fees, or interest charges, which can be applied to late invoices. Of course, you must ensure that such fees are transparent and clearly understood by the client in advance – this will help you avoid any difficult or awkward conversations should an invoice be late.
6. Work with ethically trained debt collectors
A worst-case scenario for unpaid invoices sees companies with no choice but to obtain help from a debt collection service. If not handled in the right way, such as through an abusive debt collection practice, this can have a very negative impact on client relationships and may potentially result in negative PR for your business.
The Chaser platform includes an ethically trained debt collection service, which means a team secures payments in an agreeable manner, without putting undue stress on the client relationship. The Chaser team is trained by CICM (Chartered Institute of Credit Management), the world’s largest recognised credit management community body.
Getting invoices paid promptly and correctly is hugely important for your cashflow, but you also need to safeguard your all-important client relationships. This may feel like spinning plates, particularly if a valued client regularly misses invoice deadlines.
Our advice? Make sure your payment terms are clear and agreed in advance, communicate well, ensure your invoices are easy to understand, and look into how the latest technology and software can improve efficiency.
Unfortunately, even if you have the very best payment infrastructure possible, it is not realistic to expect 100% of your invoices to be paid on time. But with these tips for getting invoices paid faster, we believe you can significantly reduce the number of overdue invoices you have to deal with.