Landing a large corporate client is a huge landmark for any small business. However, working with the big guns brings its downsides, most notably to your invoices and cash flow. That’s because larger companies tend to have longer payment terms and very specific invoicing requirements that, if ignored, can delay when you get paid.
We’re all affected by late-paying clients, but according to Fundbox’s own research, large corporations take the longest to pay SMBs. Even when you’ve agreed on terms, such as Net 30 or 45, these companies can still pay late. When you bill a large corporation, your invoices follow a process and cross many desks before payment is issued. If something goes wrong along the way, then the process stops and payment is delayed.
In fact, 48% of Net 30 invoices are paid late, as are 45% of Net 60, and 35% of Net 90 invoices. The industries most impacted are cleaning services, accounting and bookkeeping, web design, landscaping, and construction.
The following tips can help you make sure your invoice doesn’t go awry and payment is made on-time.
Make Sure You’ve Completed all the Necessary Contractual and Financial Paperwork
Your client has accepted your proposal and you’re ready to start work. Not so fast. Be diligent and make sure you obtain and complete all contractual and financial paperwork ASAP. Review each document, then sign and return it to the right contact. If they are paying you by direct deposit, ask for that form upfront and don’t wait until it’s time to bill.
Once your paperwork is complete, the client will likely then generate a purchase order (PO) number. Make sure you get that too. You can’t invoice without it.
Find Out Who You Will Invoice
Should you send the invoice to your day-to-day point of contact, directly to Accounts Payable, or both? If it doesn’t land on the right desk or in the correct inbox, you’re already delaying payment.
Find out as soon as you have a signed contract, then keep a record of that person’s contact information (you’ll need it if you need to chase payment too). Furthermore, since large companies often operate several business units, make sure you know which entity you are billing—it isn’t always HQ!
Follow Their Billing Requirements
You may think your standard invoice is good enough for every client, but it isn’t. Each client will ask to see different information on your bill, and larger companies are notoriously rigid on this one. If it’s not correct, your invoice will be rejected.
Aside from your billing address and agreed terms, things to expect are:
- Your PO number—make sure this is displayed prominently
- Project name
- Project code
- Labor category (this often crops up on government-related contracts)
- Hours worked
- Hourly rate
- Description of work completed
- Tax rate
Keep Your Invoices Simple
Accounts payable teams are busy people who deal with hundreds of documents a day. Make sure your invoice is presented in a way that is easy for them to process. Minimize fuss and colorful designs. Stick to black and white—that way it’s easily printed, scanned, and read.
Know How They Prefer to Pay
Many large companies use direct deposit or payment apps like Bill.com or PayPal. Find out what your client uses and make sure you are set up to receive those payments. This will minimize any late payment issues from the get-go.
Have a Backup Plan
Since big corporations are notorious late payers, have a plan in place to mitigate any cash flow issues that could arise because of overdue or slow payments. One option is Fundbox. By advancing payments for your outstanding invoices (aka invoice financing, not to be confused with invoice factoring), Fundbox helps thousands of business owners and freelancers overcome cash flow gaps. Funds can be delivered as early as the next business day without you needing to press your big-client customers to pay faster. Best of all, Fundbox won’t interfere in your customer relationships, so they’ll never need to know about your savvy cash flow control.