Whether you’re a construction supply store in North York, a digital marketing firm in Liberty Village or a consulting firm on Bay Street, your business probably relies on a healthy cash flow to stay afloat. But even organizations that operate on credit would rather not see receivables turning into bad debt. Which is why businesses are constantly looking for ways to get their outstanding invoices paid sooner.
A business accountant in Toronto can provide you with specific, custom suggestions for getting your invoices paid on time based on your financial statements and the industry you’re in. But for now, these tips may help you get your invoices paid faster.
Of course, It should go without saying that you have to invoice on time if you expect to get paid on time.
Clear, Easy-To-Follow Invoices
People don’t usually read every word on an invoice, especially from a regular source. So make your invoice skimmable and have these sections stand out:
- Payment terms
- Line items
- Dates, period the invoice covers, billing date, due dates, etc.
- Your contact information
- Pre- and post-tax totals
- Total amount owing (of all outstanding bills)
You may have to include specific disclaimers or verbiage for legal purposes, but check with your lawyer about putting it on the back if it clutters your invoice.
If the total amount owing and the due date can be highlighted, enlarged, and placed side-by-side, that will draw the eye, provide a quick summary of the invoice and convey a sense of urgency.
Make Sure Your Invoice Is Going to the Right Person
With larger companies, the person who makes purchases is often not responsible for paying the bills. Find out who’s in charge of accounts payable at the time of the sale and connect with them to confirm they received the invoice.
Reduce the Payment Term
As long as you offer several different payment methods, there’s little reason a customer would need 30 days to pay you. Of course, payment terms may be influenced by the type of business you’re in and the products or services in question.
With e-transfers, credit and debit card payments and several third-party apps and services, there’s little reason to wait a month or longer before getting paid. The 30-day billing period is based on a payment process that depended on a “cheque in the mail.” While shorter payment terms may cause more accounts to go ‘past due,’ you may also find that you’re collecting payments faster.
If you’re stressed out about covering your operating expenses, shortening your payment terms can help.
Discuss Payment Terms Up Front & Reward Early Payments
If you make the payment terms a part of your sales pitch instead of an afterthought, you communicate to your client that you prioritize payments. This is the time to discuss payment options, due dates and late payment fees. If your client wants to negotiate the price, consider giving them a discount for paying early. You can also consider making it a policy to take deposits up front and set up payment schedules so that the final payment is manageable and paid when the work is completed or the product is delivered.
Nobody wants to be annoying or chase people for money, but sometimes clients do actually forget about your invoice. Polite and firm reminders ensure that your clients remember to pay their bills.