There is something of a learning curve when it comes to financial processes. Even seemingly simple billing and collections processes will challenge most business owners at some point.
Account balance checks are no longer enough to ensure you receive payment in a timely manner, but there are things you can do to help bring in the payments you’re owed. And remember: If at any time you have outstanding invoices, you can always take out an invoice financing loan against the value of the invoices if you are in need of some fast cash.
In the meantime, we’ve outlined below a few of the best ways to optimize your billing practices:
Avoid Confusing Invoices
Your invoices should clearly state what was bought, what it costs, and the due date of the payment. Include other identifying information as necessary to make payment as convenient as possible for your customers. You may even want to give the option for multiple payment methods.
Finally, it is crucial to always make sure that invoice data is correct to encourage timely payment, but also to keep your brand untarnished in the eyes of your customers. By employing a software that matches invoice data with order data, you can cut down on discrepancies.
Don’t Delay Mailing Invoices
Invoices that get delayed aren’t going to be paid as quickly as those that are mailed in an orderly fashion after the sale. One of the best ways to combat this is by using electronic invoices through email.
You may encounter clients who don’t accept electronic invoices by policy. However, if even a small fraction of your billing can be done online, it will drastically improve the efficiency of collections.
Be Sure the Invoice Gets in the Proper Hands
It’s quite common for invoices to “go missing” before they arrive in the hands of the client. Perhaps the invoice was mailed to the wrong address within the business, or maybe it “requires special approval” by someone specific within the client’s company.
Frankly, these are usually just excuses for sending late payments. Still, you can avoid some of the runaround by doing your part to bill the appropriate contact from the start.
One way to help spur customers into making payments on time (or even early) is to offer discounts. Usually, a small percentage off the total invoice amount is enough to achieve this effect.
For larger clients or those who are more prone to miss payments, a cumulative discount could help prompt speedier payments. In these cases, the discount percent can increase with each successive on-time payment before finally plateauing.
Develop Positive Client Relationships
Your clients will be much more likely to make payments on time if they feel valued by your business. Providing attentive service, including after the sale, can show your clients that you care about their satisfaction.
During the follow-up communications, casually ask if they’ve received their invoice. While this will seem like a confirmation, it also subtly implies that payment is the next step. By promoting a positive relationship between you and the client, you instill a sense of trust in them that reflects back upon your business.