7 proven tips and tactics to get your invoices paid on time

21 March 2018

Encouraging your clients to pay in a timely manner - without creating a further drain on your time and resources - is critical to maintaining a healthy cash flow. Poor cash flow management continues to be rated as a major obstacle to growth by small and medium-sized businesses. According to the recent Working Capital Outlook Survey from C2FO, two-thirds of global SMEs indicated a demand for increased liquidity from 2016-2017.

From agreeing your terms at the outset to automating your invoicing process, implement these tried and tested tactics to protect your business’s financial well-being.

calculating business invoices

Quick Links

1. Agree your payment terms in advance

Getting your payment terms right is key to balancing cash flow. Knowing how and when you will be paid will allow you to plan your workload and manage the growth and development of your business. 

Your payment terms should be agreed with each new customer, in advance. Your clients are more likely to pay on time if they understand how much they’ll be expected to pay and by when. Depending on your business, your terms might include details of a deposit due before works commence and other features of the agreement, such as a staggered payment structure. 

Agreeing terms in advance gives both parties the chance to discuss any issues before work begins.

You can set your own payment terms, but sometimes, you might find that your client has other ideas. Payment terms can vary greatly from company to company, depending on the size and nature of the business. Small businesses and sole traders tend to pay and request payment immediately, whilst larger corporates can have payment terms of 30 days or longer.

Make sure you’re aware of your client’s terms and are either happy to accept them or be prepared to negotiate new ones before starting work. Once you’ve settled on payment terms, state them clearly on each of your invoices.

automated invoice reminders

2. Use automated alerts and reminders

Chasing late payments isn’t just a problem for cash flow, it can be a massive drain on your productivity, too. Automating this process is especially useful if you’re a sole-trader or a small business, without a dedicated accounts department.

Cloud accounting packages such as Intuit’s QuickBooks and FreshBooks, have become increasingly popular with small and medium enterprises in the last decade. Managing your accounts using cloud-based software offers increased flexibility with secure access to your business accounts, anywhere, and from any device.

Because these packages have been developed with the busy small business owner in mind, they’ve been designed to be practical and easy to use. As a result, they’re generally very easy to integrate into your business and come with a range of useful features, such as the options to:

  • Generate and send electronic or paper invoices
  • Send automated email reminders at preset intervals
  • Automatically apply late payment fees
  • Personalise your messages for each client

 You can opt to notify your clients each time a new invoice is generated, follow this up with an email reminder and send an automated alert if a payment becomes overdue.

Running a small business often means you have one-to-one relationships with your clients - and these are important - but they can make it awkward to discuss unpaid bills. Using an automated process to chase late payments can help you maintain a professional distance and keep your client relationships positive.

prompt business payment reward

3. Reward prompt payments

Offering prompt-payers a discount is a sure-fire way to get your bills paid on time. Nobody likes to pay over the odds and there are few people who can resist a good, old-fashioned bargain.

For example, your company might offer a 10% discount on invoices settled by immediate payment. Following this, no charges would be added to invoices paid within the timeframe stated in your terms (for example, within 30 days). Late payments would be penalised and the discount replaced with an additional charge, usually a small percentage of the original balance.

Early payment discounts give late-payers a financial incentive to settle their invoices on time. This tactic will help you separate the disorganised payers from the seriously cash-strapped (and best avoided).

4. Pick up the phone

When the phone is ringing off the hook and your email inbox is filling up, which gets your attention first?

Some business owners simply don’t prioritise email correspondence. In fact, it’s not unheard of for small business people to openly admit to ignoring emails. In these cases, it’s usually more effective to pick up the phone. A polite reminder or a friendly follow up can be all it takes to encourage debtors to pay up.

business reminder telephone

Do your best to help your clients avoid additional charges and this will only benefit your working relationship. If you haven’t had a response to an email reminder, pick up the phone before the late fees start mounting up - it could be all that’s needed.

Like what you’re reading? There's even more content on our social media – why not follow us to keep up to date with all things Gazprom Energy?

gazprom energy twitter gazprom energy facebook gazprom energy linkedin

5. Know your point of contact

Sometimes invoices are missed, overlooked or simply never reach the right department. If you work primarily with small companies and sole-traders, you’re more likely to have one point of contact for the entire project. But when working with larger companies, it’s not uncommon to deal with one person for project management and another for getting paid.

business point of contact

Sending your invoices to the right person and knowing who to contact about late payments will help ensure your invoices are dealt with efficiently and eliminate any confusion. Before agreeing your terms with a new client, ask them to confirm who your point of contact should be for invoicing and accounts.

6. Get a purchase order number

Although many small businesses don’t bother with them, purchase orders are still used by companies of all sizes.

A purchase order provides confirmation that the product or service you’ve been commissioned to provide has been correctly authorised and the payment has been approved. It’s also your proof that an order has been placed.

Using the correct purchase order number is critical if you want your invoices to be processed efficiently. Always check if you need a purchase order number before you start working with a new client. Otherwise, you might not get paid.

business reoccurring payment structure

7. Encourage a recurring payment structure

Recurring invoices are a real time-saver. Especially if you work with the same clients on a regular basis. Large companies routinely offer a discount to customers paying by direct debit, because it increases their chances of timely payment. 

But this tactic isn’t just for big corporations. If you provide similar products or services to a customer each month, setting up a recurring invoice will cut the time you spend preparing bills but also encourage your client to set up an automated payment – such as a direct debit or standing order.

You’re more likely to be paid on time, consistently, and you’ll be able to develop a better relationship with your clients when you’re not chasing them for money. 

When it comes to getting paid, don’t assume a one-size-fits-all approach. These proven tactics can be used to encourage a variety of clients to pay their bills on time, so you can count on a balanced cash flow and focus on growing your enterprise.

For more of the latest news, articles and features from Gazprom Energy, visit our blog. Alternatively, visit the homepage to find out more about our business energy solutions, or call us on 0161 837 3395.

The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.

Share this

You may also like...