Written by Liquid
Invoicing and billing is a crucial aspect of running a business. However, one of the biggest challenges many businesses face is getting paid on time after sending an invoice. Late payments can cause cash flow problems and negatively impact your company's ability to pay expenses and affect the bottom line. In this article, we will discuss ways to minimize the time it takes to get paid after sending an invoice.
Clearly Communicate Payment Terms
Before sending an invoice, it's essential to clearly communicate the payment terms to the customer. This includes the due date, payment methods accepted, and any penalties for late payments (more on that below). By setting clear expectations, customers will have a better understanding of when payment is expected and can plan accordingly.
Use Automated Invoicing
Using an invoicing software can help streamline the process and ensure that invoices are sent out on time. Automated invoicing also allows for easy tracking and follow-up.
It's not uncommon for customers to forget to make a payment, even if they intend to pay on time. Sending reminders can help prompt customers to make a payment and can prevent late payments.
Offer Incentives for Early Payment
Offering discounts or other incentives for early payment can encourage customers to pay sooner. This can help improve cash flow and minimize the time it takes to get paid.
Follow Up on Unpaid Invoices
Following up on unpaid invoices is essential to ensure that payments are made on time. It is important to be persistent but professional when following up.
Be Flexible with Payment Methods
Offering multiple payment methods can make it easier for customers to pay. This includes options such as online payments, credit card payments, and e-checks.
Implement a Late Fee Policy
Implementing a late fee policy can serve as an incentive for customers to pay on time. It is important to clearly communicate the late fee policy to customers before invoicing.
Build Good Relationships with Customers
Building good relationships with customers can help ensure that payments are made on time. When customers trust and value a business, they are more likely to prioritize paying invoices.
Understand and Manage Your Customers
Knowing your customers, their business models, and the way they operate can help you anticipate when they will make payment and also help you develop strategies to help make payment happen faster.
Be Prepared to Negotiate
Sometimes, customers may have legitimate reasons for not being able to pay on time. In these cases, it may be possible to negotiate a payment plan or other arrangement. Being prepared to negotiate can help resolve any issues and ensure that payments are made on time.
Use an Escrow Service
A/R is no longer a worry when using an escrow service - your client pre-funds milestones into a holding account and once you complete your work, the funds are automatically sent to you.
Liquid Trust: Escrow for Businesses
It's important to be proactive, communicate clearly, and build good relationships with customers. But if you want to stop worrying about getting paid on time and the other challenges of collecting an invoice, then level up your A/R with Liquid Trust. Liquid Trust is a new escrow service created to end the headaches that come with chasing down payments. With Liquid Trust, clients pre-fund the milestones they establish with vendors, letting vendors rest assured they won't have to send yet another invoice reminder.