Is the Way You Invoice Helping (or Hurting) Cash Flow?

Fundbox

Invoicing and getting paid should be fairly simple and yet, for some reason your clients are often slow to pay. Could the problem be your invoicing? According to one study, 49 percent of invoice disputes are because of invalid or missing purchase order information. Invoicing mistakes happen all the time, but most can be avoided if you follow some basic procedures. Try these eight invoicing tips to speed up your receivables.

1. Clients should never be surprised by anything on the invoice. Prices and the detailed description of services should be discussed in the beginning of the work. Surprises require going back and forth to figure out problems, and that delays payment. If there’s something confusing about the amount, don’t be surprised if the recipient places the invoice in the “problem” pile instead of the “to be paid” pile.

2. If you’re invoicing for only a partial payment—for example, if the work you did involves a deposit on services—then make sure to clearly explain that in the description. Indicate on the invoice what the balance will be on completion of the work, so there isn’t any confusion later.

3. An invoice design that has too many extras or is laid out in a complicated manner can mean more delays. Your clients want invoices to be simple and clutter-free. Your logo and a simple invoice design is all that is needed. Plus, many companies still make copies of invoices, and a clean, white background reproduces better.

4. Make the contact information easy to find on the invoice. If there are questions about the invoice you want the client to be able to contact you right away. Include a name, phone number and email address near the top or near the payment amount. For example: “Billing questions? Contact John Smith at 555-55-5555 or jsmith@mybusiness.com.”

5. If you want a quicker payment schedule, try shortening your terms. Most businesses make the payment due 30 days from invoice date; however, you could shorten that to 14 or 21 days. If you include an incentive for early payment, say a percentage off the total, it could also speed up payment.

6. Don’t guess who the contact person is or just send the invoice to Accounting (unless you’ve been asked to do so). Know exactly who the invoice is going to and the correct email or street address. Get this upfront when the service is agreed on. You don’t want the email or postal letter getting lost in some random employee’s inbox. Before sending the invoice, it’s a good idea to send an email saying, “Hi, we are getting ready to invoice and I just want to make sure you are the correct person.” Also, if you invoice via email, be sure to include a “read receipt.” You’ll be notified when the person has read the email, so you can be sure the invoice arrived where it was supposed to go.

7. Many customers and clients have a preferred system of payment such as ACH, Chase ePay, or their own internal application. Before you get started invoicing, make sure you know how they preferred to be invoiced and how they prefer to pay. Speed payments by accepting all kinds of payment, from PayPal to electronic deposit.

8. Never wait too long to follow up on late invoices. Send a friendly reminder email asking, “Did this fall through the cracks?” and if you still don’t receive a response, follow up with a phone call. Most clients will appreciate your efficiency.

Ready to grow your business?

Join the 500,000 businesses that have connected to Fundbox.
Tags: FinancingInvoice Factoring