No one likes late payments from their customers. Late payments have a negative effect on cash flow. Chasing customers for payment takes valuable time. Prevention is better than cure when it comes to getting your invoices paid on time. Here are some tips to make your invoices highly likely to get paid quickly.
1. Email your invoices
Everyone’s on email these days. Gone are the days when a formal piece of paper is the norm for invoices. Posting your invoices only delays payment — firstly there’s the time they take to reach your customers, second, there’s a high chance your customers will put your invoices in a drawer and forget about them. In Xero, you can email your invoices directly after you create them — just click ‘Email’.
2. Be clear with your payment advice
In your payment advice, encourage your customers to pay you using a payment service such as Stripe, rather than by cheque. Cheques take days to clear, can get lost in the mail and can bounce. If you prefer electronic payment — say this in your payment advice. In Xero, go to ‘Invoice Settings’ to set the payment advice that appears on all your invoices.
Make sure your customers can’t miss your payment advice — repeat it in the emails that go with your invoices. In Xero, go to ‘Email Settings’ to set up an email template that includes your payment advice. Setting up a template means all your emails will include your preferred payment options — you don’t need to retype them every time you email an invoice.
3. Send online invoices – not just PDFs
Want to dramatically increase your chances of getting paid as soon as your customers receive your invoices? With online invoices your customers simply click on a link you send them, then click on a Pay Now button. Your customers don’t even have to think about when or how they’ll pay you — they’re likely to pay you immediately. In Xero, online invoicing is set up for you – we provide the online invoice link every time you email an invoice, all you have to do is attach your payment service.
4. Attach files to your invoices – don’t give your customers a reason to query your invoices
Give your customers all the information they need as soon as you invoice them. Otherwise, your customers might use lack of documentation as an excuse to delay payment. In Xero, you can attach files directly to your invoices — this is ideal for supplying your customers with details such as work schedules, contracts and product specs.
5. Get your due date right
For the line of business you’re in, find out what’s common practice for due dates. If all your competitors ask for payment in 14 days, don’t be the business where it’s OK for your customers to pay you by the end of the following month. In Xero, set a default due date so you don’t have to think about it every time you enter an invoice.
6. Invoice as soon as possible
Finally, it goes without saying that the sooner you invoice, the sooner you get paid. Get into the habit of invoicing as soon as you complete work, rather than waiting until month-end. Xero has a mobile app, which means you can invoice from anywhere — so use otherwise wasted time, such as waiting in an airport lounge, to do some invoicing.
7. Send automatic reminders
Xero can send automated invoice reminders for you. All you have to decide is when and how often the reminders are sent out. You can also see whether your customer has seen an invoice and if it’s been paid.
Why are we talking about Xero?
We are a huge advocate for the Xero Accounting Platform, and believe it to be far superior to those in competition.
In fact, we are a 100% Xero firm – which means we only work with businesses who are on Xero. If you’re not on Xero, don’t worry, we will migrate you over and help you learn how to use it. We know you will love it too.
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This article was written by Xero and can be found here.