Having trouble with outstanding invoices? Here's how to get paid.
How many times have customers not paid your invoices by the due date? Many times? And how many times have you felt angry and frustrated about it? Probably many times too. The good news is that there is one simple little thing you can do to double the chance of your invoices being paid on time.
In a survey by TermSync, they reported that “49% cited invalid or missing purchase order information on invoices as a reason that their customers did not pay their bills…”. The reason why nearly half of all invoices don’t get paid is because there’s an error on them.
When I first started my business, customers often didn’t pay our invoices on time. At first, I took it a bit personally. After all, we’d done the work. But when I looked a bit more closely, I started to see why. We had sent the invoice to the wrong person or department, we forgot to include the Customer’s Purchase Order number, our terms of trade weren’t clearly visible on the invoice or we’d made mistakes in the calculations. We were making a whole variety of mistakes. No wonder customers weren’t paying.
Like all small business owners, we needed our money to come in fast. We needed to get our invoices right so customers could pay us one time. So I devised a simple invoice template to make sure we sent out 100% correct invoices. It made a huge difference.
After that, most customers paid us within 21 days. Cashflow was strong, I never had to ask the bank for a loan or put more money into the business. It was completely self-funded for 15 years.
Here’s the simple invoice checklist I devised to create the perfect invoice that gets paid on time:
1. Send it to exactly the right person at exactly the right address (call to check if you aren’t 100% sure).
2. Include everything your customer needs e.g. PO number (check if you aren’t 100% sure).
3. Double check the agreed price charged.
4. Double check all calculations.
5. Display your trading terms so they can’t be missed.
6. Include the date your customer needs to pay the invoice.
7. Include the name of a contact in your company (in case of a query).
8. Prominently display ALL payment methods and details so payment can reach you fast.
Calling customers to check we had the right invoicing details had a hidden bonus. We found that customers liked the fact that we were making sure we had the right details. They thought it was great customer service. And of course, our invoices didn’t get lost and didn’t have errors so customers could pay on time – and they did.
We started to win ‘Industry Best Practice’ awards and we started to get repeat business and referrals. And all because we just wanted to get our money in on time. Make a few simple checks and tweaks to make sure your invoices are 100% correct before you send them. It could pay you back 10-fold.
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About the contributor:
Jan Reeves has a passion for getting customers to pay invoices on time and ultimately improving cash flow in small businesses. Jan’s small business experience started in the early 90's when she founded a specialist recruitment agency, before selling it in 2006. She now happily follows the sun between Australia and South West France. Website: http://www.yoursmallbusinesscoach.com