If you are a small business, you will understand the need to be paid on time. Cash flow can be such a serious issue for a small business and if clients do not pay on time, it can be difficult for the business to continue to access credit to cover their costs and it is often due to cash flow issues that small businesses are forced to close their doors. So, what should a business do to encourage their clients to pay on time? It is certainly not something which can be forced and certainly not something that there is a magic solution for but there are steps that you can take to increase the possibility of being paid on time.
One of the steps that you can take, would be the introduction of online invoice payment software into your business. There is wording which you can use to encourage payment and terms that may be appropriate, you can find out more here.
So what are some of the key terms are important for your invoice?
Presentation and Clarity
Your invoice should be presented in a friendly but firm way. Politeness is the key but clarity with regard to the service that you have carried out for the client and the cost of that service is important. Details of that service and its cost should be included. You must also be clear about when you would expect the invoice to be paid. If you want the invoice to be paid within, say one week, state that payment is due within 7 days, be clear so that there is no misunderstanding between you and your client. Professional presentation of an invoice, even if you are a small company is essential as it creates a sense of a well organised and effectively run company.
There should be flexibility when it comes to the method of payment. Try where possible to offer several means for your client to pay. Your preferred method may be their nightmare when it comes to their finances, so try to work with your clients and it may mean that you have to open yourself up to alternative payment methods.
You should consider what you would do if a client were not to pay by the date due. It is always an idea to encourage compliance but in order to do that, you may have to consider putting in late payment terms. The terms should be stated clearly on your original invoice to the client. Your late payment could be a fixed sum of money or it could be stated as a percentage of the cost of the service.
If a client does not pay by the date due, follow up quickly with a reminder, do not delay as if you give the impression that you are too open with your payment structure, you will quickly be taken advantage of. Clients are often not inclined to want to pay their bills before they have to.