As a small business, you don’t have the same cushions and luxuries that larger companies are able to fall back on. If you don’t get paid on time, it can create some very challenging cash flow issues for your company. And with that being said, you should be focused on some of the ways you can get paid faster (and on time).
The Dangers of Late Payments
Late payments are a fact of life in the business world, but they don’t have to become common among your clients. In fact, too many late payments over an extended period of time can actually put your business in a tight spot. Just consider some of the ill effects:
How to Ensure You Get Paid On Time
When you stop viewing late payments as an isolated issue and see them as a serious problem that affects multiple areas of your business, you can begin to shift your priorities. Having said that, here are some tangible tips for getting paid faster and on time.
Use Invoicing Software
With all of the advanced software and online solutions that exist in the marketplace, there’s no excuse for handling invoicing manually. Spend some time researching tools that align with your needs and you should notice far greater efficiency with your accounts receivables.
FreshBooks is probably one of the best options. They claim that their cloud invoicing solution helps businesses get paid twice as fast as normal methods. They also offer convenient templates that make it easy to whip up an invoice in seconds – even when it’s a new client.
Time it Right
If you want to increase your chances of getting paid on time, you have to be cognizant of when you’re submitting invoices.
Never submit an invoice with the final deliverable. You want to create a little bit of space, in case the client isn’t satisfied. Generally speaking, within 24 to 72 hours is ideal.
Most agree that Sunday is the worst day to send out an invoice, while Thursday is statistically the best.
30-day terms are the norm in most industries. If you use these terms, expect to be paid within two weeks.
You know your customers well, so tailor the timing to their needs and expectations. You want to make it easy for them, without creating excessive leeway.
Incentivize Quick Payments
Some clients need to be nudged along. You can increase your chances of getting paid early by incentivizing clients to make quick order of things. Most commonly, businesses will use tiered discount systems where clients get one or two percent off the bill by paying within 10 or 15 days. Subsequently, you may charge fees for every day that a payment is late.
Be Quick to Follow Up
Don’t delay in reaching out to a client if they miss an invoice’s due date. Follow up immediately with a phone call and ask for an explanation. The quicker you are to reach out, the more seriously they’ll take you.
Take Invoicing Seriously
It may seem like an inconsequential detail of running a business, but invoicing is something that you absolutely must take seriously if you want your organization to run like a well-oiled machine. By prioritizing fast and efficient payment cycles, you can improve cash flow and keep your business on track.
Keeping this in mind, give invoicing the focus it deserves.