As a marketing consultant who has been sending out invoices for almost a decade now, I have developed a list of invoicing tips that could help any small business get paid faster. It is important to remember that at the end of the day any tip about better invoicing should be focused on the ultimate goal of being paid the full amount, on time.
The shorter the credit terms on your invoice, the better. If you put net 30 terms on your invoice, the customer isn’t going to feel the pressure to pay until they are deliquent. My experience has been that no one pays on time and so the sooner you can set expectations for payment, the better. Unless industry invoicing norms prevent you from doing it, I would always set invoice terms to “Payable upon receipt.” Get the payment clock ticking as soon as possible. Then, any time you see your customer, or email them, or have any contact with them at all, that invoice payment due will be pushing its way to the front of their mind.
It is going to be very hard for your customers to pay their bills if they never get them in the mail. Make sure before you send off an invoice for a new client that you confirm their contact information. Even for an existing client, you will want to confirm that their existing address hasn’t changed. I had a client who received all their mail at a PO Box. Because of some changes in ownership, they changed the PO Box without notifying me. My invoice eventually got to them but it significantly delayed the payment process. Lesson learned; don’t make the same mistake. Double check before you mail something over!
I had some customers who insisted on getting their invoice via the postal service. I always suspected that this was because it gave them a couple extra days before the payment clock started ticking but they were old so what are you going to do? It’s okay to make occasional exceptions like this, but for everyone else, make sure that you are emailing invoices to them. Also, make sure they respond that they received the invoice. Email might seem like an obvious step to getting your invoice paid faster but also consider what technologies you are using to create the invoice. If you are using Excel or Word to create invoices, it is time to get with the 21st century. I was feeling pretty clever using Google Sheets to create invoices because it was cloud-based and I could access all my invoices from Drive until I realized that there are some pretty good free accounting software options out there that do a lot more than just store your invoices for you. If your customer loses your invoice, it is a lot nicer to have a program that manages everything than having to hunt through files or old emails to resend your bill.
This one is scary. If you charge late fees to a client, you might be afraid that it will hurt the relationship. Don’t worry, you can always waive late fees for loyal repeat business, but for new clients that you can tell will be stinkers to work with again anyway, stick to your guns. On top of this, the fear of having to pay late fees will guarantee that you will get paid faster on average. Think of late fees as interest on the de facto loan that you are extending to them between the time you finish the work and the time they make payment.
Invoicing is just a glorified term for a bill that one business sends to another. This is an important point to remember. If you are a sole proprietor, you may be stuck in the mindset that as an individual, you should charge the same way you would be paid an as employee: hourly. Do you think Apple is pricing their computer based on the amount of hourly work that gets put into their computers? No! They are pricing their products based on what people are willing to pay. Make sure when you send over invoices to another business, you are invoicing based on what The service is worth, not the amount of work it took to accomplish. If you bill at an hourly rate, you will have to work forever! Make sure to price in your own eventual retirement into the invoice.
Now go take these 5 tips and go get paid. There may be points that I cover that aren’t going to apply to you, but I hope that there is something of value in this post that you can implement today that will get you paid faster tomorrow. Cheers!
Brad Hanks is in charge of Growth at ZipBooks.