How can you ensure your invoices are paid on time?

Late payments from clients and customers can be highly problematic for a business owner.

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As well as disrupting your cash flow and threatening the financial health of your business, late payments cause hassle and headaches.

Fortunately, you can take steps to ensure that clients pay their invoices on time. By being organised and employing the following techniques, you can keep late repayments to a minimum and improve your cash flow. 

Put a clear process in place

When you sign a new client, it’s easy to get carried away and forget about the practical details. Whilst a new project will be exciting, it’s essential to get clear on the practicalities of getting paid. During the onboarding process, make sure that you ask the following key questions:

• Who should I send the invoice to?
• What is the approval process?
• Who do I speak to if there’s an issue?
  

Take time to review and agree to the payment terms, and ask any questions you’re not clear on. Handling the payment details upfront saves time and hassle in the future and increases the likelihood of being paid on time. 

Make sure your invoices are clear and accurate

Your invoices must be easy to understand with a transparent pricing breakdown. They must be accurate; mistakes result in many unnecessary back-and-forths and are likely to delay payment. Sending clear and precise invoices goes a long way in helping you to get paid on time. 

Send follow-ups

No one likes to feel as though they’re nagging, but often you have to remind clients and customers when an invoice is due soon. It’s essential to be polite, but it’s also necessary to be firm. Many clients don’t mean to pay late, but they’re busy, and it slips their mind. A follow up a few days ahead of the deadline is an effective way of jogging their memory and prompting them to take action. 

Use invoicing software

Keeping track of invoices and deadlines can feel like a full-time job. But, it’s essential to send invoices to clients promptly; how else can you expect them to pay on time? On top of that, you need to keep a close eye on whose payment deadlines are approaching, so you can send follow-ups if necessary. Using invoicing software will automate a lot of that and save you time and hassle.

Invoicing software allows you to create custom invoicing workflows, automate payment reminders and alert you to which clients have and haven’t paid. This puts you more in control of your finances and reduces the chance of human error within the invoicing process. 

Consider a late payment charge

If late payments continue to present a problem for your business, consider introducing a late payment charge to encourage your clients to pay on time. No one wants to spend unnecessary overdue fees, so this is an effective way of ensuring that your clients pay their invoices on time. But be open about these fees from the beginning, so clients understand they will be charged extra for late payments. Make sure you send reminders ahead of time to allow them to avoid these fees.

Don’t feel guilty

In particular, new business owners often feel guilty about sending invoice reminders and chasing up late payments, but remember that you have every right to be paid for the products and services you provide. Whilst it’s OK to care about clients who may be struggling financially, that responsibility doesn’t fall on your shoulders. The financial health of your business must remain your priority. Never feel guilty about chasing up payments that you are owed.  

Summary 

Being organised is half the battle when it comes to being paid on time. Getting clear on the practicalities of payment from the start will help to ensure that the process runs smoothly in the future. Creating accurate invoices and sending them promptly is also hugely helpful. These small and simple steps can have a significant impact on the financial health of your business, so make them a priority today. 

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