3 Ways to Get Paid Faster
Company culture, cute offices, and collaborative environments are great things for small businesses to have. But healthy cash flow is absolutely essential. So whenever someone comes up with empirically-based, simple ways to get paid faster, small-business owners sit up and listen.
Which, handily, is just what FreshBooks has done. Due to the nature of its business, the cloud-accounting company is in possession of not only reams of real-world invoices, but also plenty of hard numbers on exactly how quickly they were paid. So earlier this year, FreshBooks sifted through this data, plotting certain key phrases against the quickness of payments to determine what phrasing works best to get you paid quickly.
It turns out simple changes can make a big difference. If you want to get ahold of the cash you're due more quickly, Freshbooks recommends:
Be Polite. The first thing we noticed in the data is that being polite really matters! A simple "please pay your invoice within" or "thank you for your business" can increase the percentage of invoices that are paid by more than 5 percent! That could easily equate to thousands of dollars per year. Not only that, but politeness clearly gets you paid faster.
Days to Pay. Using the word "days" as opposed to "net" gets you paid more often and faster. While the words "net 30" or similar may make sense to most business owners, perhaps that kind of wording is not as clear to less business-savvy clients.
Dump "Upon Receipt." Most people seem to interpret "upon receipt" as "whenever you feel like it." It's as if they receive an invoice with the words "payable upon receipt" and immediately dump it into the "whenever" pile. Using specific terms such as "21 days" seems to focus the client's mind around a specific timeframe and will actually get you paid faster than asking for immediate payment.
These small edits clearly caused invoices to be paid faster according to FreshBooks's analysis. One other change also affected when an invoice was paid but involved trade-offs. Declaring that interest will be charged on late payments, it seems, "gets you paid slower, but it also seems to ensure a higher percentage of invoices will get paid."
What exactly does all of this mean for your business? According to Freshbooks, the final takeaway is two possible wordings for your invoices. If getting paid quickly is most important to you, the company suggests adding this line, or something very similar, to your invoice: "Thank you; we really appreciate your business. Please send payment within 21 days of receiving this invoice."
If you're company has slim margins and getting paid every nickel you're owed trumps getting invoices paid a bit quicker, then think about adding interest to late payments with phrasing like this: "Thank you for your business. We do expect payment within 21 days, so please process this invoice within that time. There will be a 1.5% interest charge per month on late invoices."
Have small changes ever made a big difference to how quickly you get paid?