In a perfect world you could invoice a client and get paid immediately. Unfortunately, we don't live in such a world. That's why business owners of all-sizes must develop good accounting practices to stay on-top of their invoices so that they can get paid on-time.
I'm the CEO of Due, an invoicing and payments company. I've analyzed millions of invoices and found a few trends among business owners that get paid and those that don't.
If you want to speed-up your payment process, then work on developing these 12 habits of bosses who get on-time.
1. They don't wait to get paid.
It's no secret that the longer you wait to get paid, the longer it's going to take for that cash to be moved into your bank account. And, when there's a payment delay, your cash flow suffers. As a result, you may not be able to pay your expenses and will get hit with late fees.
To avoid this dilemma, bosses don't wait for that to happen. Instead, they get paid before the invoice is even due by requiring a deposit or retainer. A boss may offer recurring billing, or sell unpaid invoices to an invoice factoring company. For this exchange they get the cash they need right now.
2. They're organized.
Getting organized, and staying organized, is essential if you want to keep accurate and up-to-date account information. Creating accurate invoices, knowing which clients have paid their bill and which have not are basics. Keeping up by asking for notification when a client changes their email address or billing information is another plus.
Even though invoicing tools have made organization a whole lot easier, a boss knows that it's ultimately their responsibility to get paid. Being organized is a key component of this responsibility that provides a way to effectively and quickly create and manage invoices.
3. They don't skimp on the details.
Clients don't want surprises when they open an invoice. They want to have at least a ballpark idea of what they're going to be charged. That's why it's recommended to send clients a quote or estimate prior to starting a project. But, that figure will probably change during the course of a project.
The difference that may occur in pricing is why an invoicing master never skimps on the details. They understand that an invoice is a detailed statement that explains to the client what services were performed. Keeping these records makes it very clear what money that is owed.
Bosses know that every invoice needs to include the amount due, the payment due date. The client will receive an itemized description of the goods or services purchased. The client or customer's information such as address, tax ID number will be enclosed with details.
Remember, the more information that you can provide on an invoice, the better. Not only does it make you look more like a pro, it also helps the client understand what they're being charged for. They'll know precisely when the payment it's expected and this will prevent any hiccups during the payment process.
4. They use the cloud.
Manually managing all of your accounts is an antiquated process that is time-consuming, ineffective, and expensive.
Those who get paid on-time are well-aware of this and have gone paperless by moving to the cloud. This allows them to create and send invoices in a matter of minutes. This naturally means getting paid more quickly by not dealing with snail mail.
A cloud-based software comes with features like recurring billing and sending automated payment reminders. You can even add "pinging" customers until they've paid their bill.
5. They give their customers/clients payment options.
Not all customers or clients use PayPal, eCash, or their credit card when paying an invoice. Some may prefer to use ACH or transferring funds through a digital wallet. That's why bosses give their clients multiple payment options to chose from.
Providing options makes it automatic for your client to pay you with the method they are comfortable paying. Whatever your client typically uses for their payments helps them to complete a transaction in a couple of steps. In some cases, like bitcoin, the entire transaction, occurs almost immediately.
6. They ask for shorter for payment terms.
On average, debtors pay two weeks late. So if you want to get paid on time, then it's in your best interest to set the payment terms two weeks earlier than you expect to get paid. For example, a payment term of 13 days is used if you want to be paid within 30 days.
Bosses know that the shorter the terms, the less time it will take for that money to get placed into their bank account.
7. They automate processes.
Moving to the cloud helps process repeat invoicing. Cloud keeps track of VAT/tax calculations and provides accurate accounting records. You can set up that even your credit control can be controlled. This means that you can spend more time on growing your business, instead of invoicing.
8. They've developed their own policies.
This can't be stressed enough; the primary goal of invoicing is to get paid for the services you performed. Unfortunately, there will be times when you have to deal with a stubborn client who refuses to pay on-time.
That's why invoicing pros develop their own policies to prevent this from happening based on factors like:
9. They're "intelligent."
Cloud-based software and apps make accounting more "intelligent," by streamlining different business processes. These can be used alongside your accounting software. For example, Due integrates with project management tools like Basecamp and accounting software like Quickbooks.
10. They're kind, but firm.
It's been found that being polite to clients by saying "please" and "thank you" helps no matter what business you're in. Showing appreciation like handwritten letters or a gift like a free piece of content can speed-up the payment process.
At the same time, bosses also realize that they also have to be firm when it comes to sticking to their payment policies. This means following-up on late payments. This doesn't mean they fly-off-the-handle. Firm means to stand-up for oneself when it's time to get paid.
11. A boss will personalize their invoices.
Invoicing is more than just getting paid. It's also a way for you to build and strengthen your relationship with your customers. And, the best way to accomplish that is by personalizing invoices.
You can use the following techniques to personalize your invoices;
12. They don't invoice.
Shouldn't invoicing be a priority?
Absolutely. But, a real boss either hires an accountant, delegates the task to an employee, or outsources their invoicing so that they can remain focused on growing their business.