5 Tips for Faster Invoice Payment
There is nothing more frustrating for a business owner than late payments or worse, missed payments. Could it be that your invoicing strategies are floundering? Discover how you can create better invoices to speed up payments with these five tips –
Keep it Professional and Polite
When you are preparing an invoice, it is important to infuse a bit of warmth into that piece of paper. The person paying the bill should feel that it is an appeal from another human being, not a robot. It doesn't take much. Simple phrases of politeness used in day to day life like "please pay within" or "thank you for choosing us" have the strongest impact. In general, not only are the invoices paid faster, but customer relations show marked improvement as well.
Number your Invoices
The unique, sequential code systematically assigned to each invoice is known as the invoice number. Invoice numbers are a crucial aspect of invoicing as they are an easy way to record payments and income, which can be later consulted for tax and accounting purposes. This is especially crucial in the case of a GST invoice which has implications of government regulatory compliance. Though simply assigning the invoices numbers “1”, “2”, “3”, and so on may be a good idea for new businesses, it will prove to be confusing in the long run when invoice numbers reach double or even triple figures. Hence, the most common and reliable method of numbering invoices is to use the date or the year in which the invoice was prepared. For example – the invoice numbers for the year 2019 could be written as “190001”, “190002”, “190003” and so on. Also, invoices should be sent out in a timely manner. By some estimates, businesses across industries together lose out billions of dollars’ worth of revenue each year due to sloppy processing. This could also be due to the accounting software used, which may not meet the requirements of the particular business adequately. Every business, therefore, needs to have a clear and efficient system of booking and dispatching invoices on time.
Provide Complete and Relevant Information
These days, invoices are usually mailed to the customer. However, as anyone who owns an email id would agree, the sheer number of emails we receive each day leave us swamped. The average person can attend to only a limited number of emails every day. This means that you have to make every email stick. This is especially crucial when that email contains a GST invoice from you. Here are some points to consider when sending out that GST invoice email:
Make sure the invoice contains all the relevant information
There should be no superfluous details
Phrases should be clear and concise
Technical details should be self-explanatory (for example: please pay within 14 days)
There should be no room for confusion
Include multiple ways to reach you in case of any query (for example mobile, email, Skype, WhatsApp)
Don’t forget your manners. Be professional but not brusque
While the contract with the customer may include penalties such as the interest for late payment, refrain from mentioning this in the invoice. Not only is this unnecessary, it may make the customer feel that you are not willing to be flexible to their circumstances. This may hamper a steady cash flow for you in the future.
Offer multiple payment methods
Each of your clients may prefer a different mode of payment. For example, some may accept bank to bank transfers like RTGS/NEFT, some may issue payment through debit or credit cards and others may use UPI, Paypal and other hi-tech ways. Still others may opt for the old school cheque payments. Giving your customers the flexibility to pay through a plethora of methods assures regular and faster payment from them.
The business environment is dynamic and so every business always operates with some degree of uncertainty. This is a mantra to repeat to yourself whenever you find that a client has not paid. In general, it is best to assume good intentions on the part of the client, unless you have a strong reason to suspect otherwise. For example, if you have a client who always pays on time, but suddenly didn't pay one invoice, it could be because he forgot. Just send him or her a friendly reminder. The reminder should be short and sweet. Repeat the process until the invoice is paid. Try to directly call and remind. Sending an email is no guarantee of response or payment from the client and is easier for him/her to ignore and forget about.
Using automated accounting app for GST invoice proves to be highly beneficial as the software tracks payments and even sends automated follow-up reminders to your clients. EZO by LegalDocs is one such free tool that automates the invoicing process.