One of the more difficult parts of being an entrepreneur on your way to your first million is coming to grips will all the financial responsibility you have. This includes having to be on top of all your accounting, including your invoices.
Because you need to have positive cash flow to survive in the market, you have to make sure your invoices get paid on time, every time.
Before we go into exactly how to make sure that happens, first let’s clarify what an invoice really is.
An invoice is a non-negotiable request for payment sent by the seller after the goods or services have been delivered.
Although the standard invoice is the most common, there are actually many types that are used by businesses around the world. These may include proforma, commercial, and other types of invoices, depending on the industry.
Now with that out of the way, let’s look at the 7 best ways to ensure your invoices get paid in full every time.
#1 Create pricing policies
Before you’ve even gotten your first clients, you need to make firm pricing policies that discuss the payment terms specifically. This will help to avoid any confusion, delays or challenges by your future clients.
In your policies, make sure to include:
- whether you’ll take payment upfront
- how much time will be allowed for payment
- whether you’ll charge late fees
- how you’ll accept payment (cash, debit, bank transfer, PayPal, Bitcoin, etc.)
#2 Create a quote for each job
While your policies cover the general payment terms, you’ll still need a reference document for each job you’re working on.
You’ll need to be able to answer the following questions:
- What are your client’s expectations?
- How long will you have to deliver the goods or services?
- What in detail is the extent of the services you’ll be providing?
By answering these types of questions beforehand, you’ll be able to avoid surprises and scope creep.
#3 Be clear but detailed on your invoices
One of the big reasons for delays in having your invoices paid in part or at all can come from a lack of clear details on your invoices.
This could be due to important missing information, such as a lack of dates for jobs performed or goods delivered. It could also be due to missing bank information, the invoicing being sent to the wrong person, or a myriad of other simple mistakes.
Before you send your invoices out, make sure the details are correct.
#4 Send out your invoices ASAP
Although this may seem like a common sense point, it often times gets lost in all of the other responsibilities that entrepreneurs have. This is especially true since they tend to prefer to do everything by themselves.
Immediately after the job is completed, you should have your invoice written up. Even better, have it prepared before you’ve delivered the goods and the services, so that you’ll just need to send it out along with the product.
#5 Be persistent with late payers
Although this point is more geared towards your invoice payment already being late, what you do now can help you get paid faster next time.
Most entrepreneurs are overly patient with their clients when the invoice payments don’t come in on time. This is understandable because you don’t want to scare off or lose a customer.
However, it is also unnecessary and unprofessional. If you’ve delivered the goods or services on time, the customer has the obligation to pay you on time. For that reason, you should send a payment reminder a few days before the invoice is set to be paid.
This will show that you are expecting payment, and also to remind them that they’ll have to pay soon (customers may have already forgotten). What this does is communicate that you are a professional in all aspects of your business and your customer will avoid being late next time.
With these tips, you’ll begin to see more and more of your invoices being paid on time. Good luck!
Bernard Meyer is the Head of Marketing at InvoiceBerry, the online invoicing software committed to helping small business owners send out invoices quickly and professionally. You can also find him on Twitter and LinkedIn.