Getting Paid Faster

Posted 19 Sep '22

Getting Paid Faster

One of the more annoying business admin tasks is chasing up unpaid invoices. In a perfect world, you finish the work, send the invoice, and get paid. Unfortunately, that is often not the case. Xero conducted a survey on small businesses. They found that almost half of invoices sent to customers are paid late.

Getting paid late is bad for business. It constricts cashflow and sometimes even has the flow on effect of you missing your own bill deadlines, stressing relations with your suppliers, reducing your ability to negotiate for better pricing and payment terms.

Fortunately, there are ways to minimise the pain of debtor follow-up. Here are 6 tips to help you get paid faster.

Review and adjust your payment terms

Think about how much time you give customers to pay you. Is the generosity of your terms straining your cashflow? Can you tighten up that period? Close to 75% of invoices ask for payment within 2 weeks, so expectations are changing. Remember to communicate your changes to your customers.

Get insight and data on your customers

Before taking on any new clients, make sure you can trust them. You can now view a company's credit report to make sure they're legitimate and check their non-payment history. If you know who you're dealing with you can set the terms and be more confident that you'll receive payment when you request it.

Invoice as soon as possible

Send your invoice as soon as possible, the sooner a client receives an invoice the sooner they will make payment. It also means they will receive it when the value of your work is still fresh in their mind. Accounting software that lets you create professional recurring invoices will streamline the invoicing process.

Get in touch earlier

Don’t wait until an invoice is two weeks late before reminding a client, they owe you. Send a friendly email as the due date approaches. Follow up again if they go past due. Using invoicing software means you can set automatic reminders. If you still get no response, make a friendly call.

Make your money work for you

Even after optimising payment terms, you might find you still have a cash flow gap. Tools like an overdraft or financing that can help you bridge that gap.

Give your customers more ways to pay

Make it easy for customers to pay you and they might do so faster. Offer online invoices that let clients 'pay now' from within the invoice. There's also direct deposit and credit card capability that's simple to set up. Look for one that integrates well with your accounting software. A good integration means more features and an easier reconciliation process. Some will even allow you to recoup the online payment fees by way of a surcharge to your customers.

If you have further questions and would like help setting up systems to improve your invoicing process, get in touch with your WDF team member on 6921 5444.

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