A credit management guide for small businesses

The Know-it team

Dec 29, 2020

How to improve your payment and invoicing process

If you find your invoicing process tiresome or messy it could be time for you to review it. While you may be focused on getting paid from your customers, ensuring that the payment process is quick and seamless is key. Invoicing can take up a lot of your precious admin time, so we’re here to help with our top tips on improving the process.

Be flexible – offer different payment methods

When it comes to getting paid for your services, offering multiple options can help you get paid faster. If you only offer one method of payment your customers can find it more difficult to pay you on time. What’s more, having limited payment options can even drive away some of your customers who are looking for easier and faster ways to pay. Having multiple payment methods gives your customers more opportunity to pay you quickly and effortlessly.

Automate your invoicing

If you haven’t already automated your invoicing process – now is the time! There are many secure accountancy apps that will help you to manage your invoicing and stay on top of your customer payments. Automating your invoicing will save time and mean that you don’t need write individual invoice emails as the software will do it for you.

Automated invoicing will also allow you to schedule invoicing in advance so that they are issued at a specific date and time. We partner with leading accountancy apps such as SageFreeAgentQuickBooks, and Xero who specialise in automating invoices for small and medium sized businesses.

Set your payment terms

Setting company-wide payment terms will help to avoid late payments, establish good customer relationships and increase your chances of getting paid on time. Decide if you should get paid for hourly or day rates or if you should be paid by your product or service. Your payment rates can sometimes be influenced by the industry or line of work that you’re in.

Next, decide when and how your customers should pay you – and make sure these are communicated clearly to your clients! Before you agree to do any work for a returning or potential customer make sure that these terms are crystal clear. This will help to avoid late payments, reduce your debtor days and increase your cash flow.

Create clear invoices

It’s important that you learn how to invoice correctly. Having inaccurate information on your invoices can open you up to payment disputes with your customers. Make sure that your invoices are clearly laid out – your automated accountancy software should be able to do this for you. Be sure to include the following in your invoice:

  • Your company name, address and contact information
  • The client’s company name and address
  • The date of the invoice
  • What you are charging for and when the goods/services were provided
  • A unique identification number

Again, if you have automated your invoicing using an accountancy app like Xero, then it’s likely that they will provide fields for you to populate this information.

Send payment reminders

It’s important not to pester your customers but sending payment reminders can help to reduce the occurrence of overdue invoices. Use payment chasing tools like Chase-it to communicate with your customers when their payments are due. Chasing tools let you schedule in your payment reminders in advance so both you and your customers can stay on top of their finances.

Follow up on late payers

Hopefully, if you take steps to improve your invoicing process, you won’t have to deal with late payers however, they can sometimes still crop up. Don’t let late payments pass you by, follow them up and do your best to get paid what you’re owed. Following up on late payers can be a necessity in order to protect your cash flow.

Remember to always be professional when approaching late paying customers. If your approach is too aggressive you risk damaging your brand’s reputation and your customer relationships. In turn, this will reduce the likelihood of any future business from them.

If you are struggling to collect an overdue unpaid invoice use Collect-it to receive a quote for commercial debt recovery with our prelitigation partners, Darcey Quigley. The quote offers a risk-free approach to collecting your payments with a no-win, no fee basis. Discover more about collecting your overdue unpaid invoices.

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