Timeline and plans, why are they important in getting you paid?
Why you need a timeline and plan to get your invoices paid on time
You send an invoice and expect to get paid. Sadly, it doesn’t’ always work out that way. Many small businesses suffer cashflow problems because they haven’t thought about a payment timeline and organising a plan of action to make sure they get paid on time.
Do work, send invoice, get paid.
Often that’s the only process we have. We send out the invoice and then wait and hope, with fingers crossed for the payment to hit on time. Then, if payment is late and because we don’t want to spoil our customer relationships, we do nothing about it. Invoices become overdue and cashflow suffers immensely.
Plan of action to get paid on time
Something you may not have realised is that in the natural course of doing business, it can take at least 3 months to get your invoice paid.
That’s why you need a plan, a process and a script.
First, let’s look at the basics.
Why your cash flow is suffering?
Let’s suppose your payment terms are 30 days. If you complete a piece of work on the 5th of the month but don’t invoice until the end of the month, you can effectively add 25 days on top of the 30 days it takes to get paid. Even if the customer pays on time, it may take another 2-3 working days for that payment to hit your bank account.
25 + 30 + 3 = 58 days
How can you get your invoice paid faster?
Why wait until the end of the month to invoice your customers? Perhaps you feel that preparing your invoices all in one go, at the end of the month, is better use of time. But have you stopped to think how it could be affecting your cash flow?
Getting paid on time is the key to efficient cash flow so I say make invoicing a priority and put it at the top of your list every day.
Why are your payment terms 30 days?
Your business payment terms don’t need to be 30 days. Yes, it’s standard practice but you can choose whatever payment terms suits your business or customer; on receipt, 7 days, 15 days. Make it very clear in your terms of business, the contract with your customer and especially on the invoice you send.
What’s makes the perfect timeline?
Having a plan and timeline in place can reduce the amount of time it takes to get your invoice paid in just two phone calls.
Phone call 1
Let’s say you sent an invoice on 1 August with 14-day payment terms. There’s every reason to phone your customer on 3 August to check if they received it.
While you’re on the phone note down something that’s going on in their life. Because that way you’re prepared for your next call.
Phone call 2
On 7 August pick up the phone and ask about the event they mentioned. During that conversation, mention the invoice and see if there are any problems with it.
Get 95% of your customers paying on time
If you would like the perfect timeline and script for making sure your second and third calls are not confruntational as well and to get further tips on how to keep your customers paying you on time, then Join the Cashflow College today
LINK TO INFOGRAPHIC
What is the Cashflow College?
Led by Rachael, The Cashflow Queen, the Cashflow College is your access to Rachael’s over 20 years’ experience in getting paid on time, the processes and procedures you need in place to help this happen and the techniques needed to empower you to do this every time you raise an invoice.