Maintaining a healthy cash flow is critical for small business owners. Getting paid isn’t as easy as sending off an invoice and watching the money roll in, so follow our 5 tips for getting paid faster and keep the lifeblood of your business flowing.
#1 Invoice slick
Make your invoices simple and easy to understand. Don’t use industry jargon if your customers are going to get confused about it.
Make sure your invoice has all the correct details, including a description of the work/product, delivery date and any client requirements (such as a purchase order number). Some clients have very specific requirements so ask what they need to see on the invoice. If they have to come back to you for more information, you could miss the next pay run.
#2 Invoice quick
Invoice straight away. Your invoice can’t be paid if you haven’t sent it. If you’re setting the example of invoicing late, don’t be surprised when your customer feels comfortable paying late. Use Xero to send invoices from your phone as soon as you’ve finished a job.
TIP – Don’t just send the invoice to the person who placed the order or hired you. Ask if there is an accounts payable department so your invoice isn’t ignored.
#3 Make payment terms and due date clear as day
Avoid confusion in the first place. Discuss with new customers what your payments terms are prior to starting work. Start by requesting payment within a week. Even if you plan to negotiate this with a customer, it will help to set an expectation of prompt payment from the beginning.
When it comes to invoicing, make sure the due date and payment terms are written in plain English. If you need your customer to include the invoice number as a reference when they pay or have any other requirements for payment, make that extremely clear.
#4 Be easy to pay
Customers will pay faster if they can use their preferred method to hand over the money. Offer them a variety of options. And be aware that most customers like to pay using credit card or an automated clearing house (like PayPal). Xero accounting software has undertaken research that shows you'll get paid 10 days sooner if you offer these options.
#5 Work smarter: Automate chasing with add-ons
Xero user? Use add-ons such as Chaser or Debtor Daddy to automate your invoice chasing process. Keep it human by creating your own templates and sending emails from your usual email address so your customer doesn’t feel like they’re talking to a robot.
If you’re already using Xero, there’s definitely an add-on that will save you time and money. Check out our top picks here.
If the bookkeeping is taking too much time out of your day, consider an investment in Verve Group's bookkeeping services. Call us on (08) 8120 4877 or book an appointment online.