How to get paid on time: 5 mistakes people [businesses] make with their invoice and how to avoid them.
Over the last almost 20 years, I’ve been looking at the invoices I send and I’ve received both in the land of corporate credit control and as a business myself. An invoice isn’t just a request for payment, it’s a marketing tool, another way to engage with your customers and a way to build your brand.
So the most common mistakes I’ve seen on invoices are:
1 – Terms but no due date.
Brilliant if you put out payment terms are 14 days, that let’s the customer know when you they need to pay by. However you’re giving your customer a lot of flexibility. WHY?
Well when does the 14 days start? The day you raised the invoice? The day you posted the invoice? The day they received the invoice? The day they processed the invoice onto their system? Or an date they chose?
By putting the Due date on there, you are giving them a clear instruction that the 14days finishes on date X. Therefore there can be no miss-interpretation.
2 – Descriptions that mean nothing to your customer.
It’s great that you are including a description of what you’re charging for. Will the customer understand your description though?
For example, Item description “XP2889F” may be fine for you but your customer might ring up and order “Branded Pens with a metal clip”. So putting XP2889F on their invoice would lead to confusion over what goods you were charging for.
3 – No customer reference on the invoice.
Generally people want to pay you if they know what they are paying for. Did your customer give you a reference? YES, then put it on the invoice. NO then put the date you had the call/received the email agreeing to the work.
Anything you can add that will make it easier for the customer to remember what they are paying for, the earlier you will get paid.
4 – Not identifying who placed the order.
Unless you only deal with Micro businesses, it is unlikely the person paying you will be the person who placed the order. If clarification is needed, how easier is it for the accounts person paying the invoice to know who to ask?
By adding the name of the person who placed the order, you are making it easy for the accounts person paying to clarify any query. Your invoice won’t go on a pile of queries to be investigated later as the accounts person know who internally to contact.
5 – Not telling them what will happen if they don’t pay.
So many invoices don’t tell people the consequences of not paying on time. If you don’t include the action that could be taken should payment not arrive, what incentive is there to settle your invoice on time?
You don’t need to outline every single little step you will be taking to get payment, simply by adding the following statement, you will be making clear, there COULD be consequences for not paying on time.
“Interest will be charged under the Late Payment of Commercial Debts (Interest) Act 1998”.
In summary, make it easy for your customer to pay you and 95% of them will without you chasing them, giving them all the information they need will assist them to pay you on time.
It saves them time and money, it saves you time and money – it’s WIN WIN!