Do you dream of being paid on time, everytime?
Would it be a dream come true if your cash flow was always positive because your customers pay your invoices on time, every time?
The main reason cash flow suffers is because of late payment and because they’re our lovely customers and we don’t want to lose or upset them, we just sit there, wait for them to pay when they’re ready and then get stressed about cashflow.
Don’t just dream it
First, we need to understand what causes late payment and then remove the obstacles before late payment happens. It’s about forming good invoicing and follow-up habits of your own.
Reasons your customer gives for non-payment
Sometimes paying late is unavoidable but most of the time it isn’t.
- We haven’t received the invoice.
- There’s a query, so I can’t pay it yet.
- You haven’t quoted a Purchase Order number.
- I can’t pay you right now my HMRC bill is due.
- The director needs to approve the payment.
- Our terms are 60 days.
- It was too late for this payment run.
- I can’t pay you until I’ve been paid
Any of this sound familiar?
Always raise your invoice on time and while the customer is still aware of exactly what it’s for and while they still have the need and enthusiasm for receiving the goods or service. If the invoice is for payment up-front, stage payments, send that invoice right away if you want to get paid faster.
Remember – Payment up front means you shouldn’t be starting any work until you get the payment so if it means having to chase it, it’s good for you and good for the customer. It’s in their interests to settle as soon as possible and prevent any delays.
Get the invoice detail right
There is certain information you must include on your invoice and this is a legal requirement. And… there is other information you should include because this helps you get paid quicker. Things like:
- Your customer’s reference or PO no.
- The date you customer must pay you.
- Clear description of services or goods you provided
- How to pay. Do you take credit cards, PayPal, cheques, BACs, Bitcoins? If you raised your invoice in another currency, how will you apply the transaction charges?
- Be Big and Bold – Clearly state the payment details in a font and typeface that’s clear and large enough for someone to read without glasses.
Send invoices to the right person
Find out the specific email address, person or department where you need to send your invoice and what the approval process is. I can’t stress this enough. Just because you’ve been dealing with Bob in the Commercial Department at ABC Co Ltd, Bob may not be the person to send the invoice to. Many large companies have a central accounts department and if your invoice isn’t on their system, you won’t get paid, simple as that. This is all part of the secret of getting your invoices paid on time.
Follow up quickly on late payments. Don’t let late payments fester. The longer it takes you to follow up a late payment, the later the payment will be.