Non-payment and late payment of invoices hinder business growth and can even lead to business closure. Below are tips for small business invoicing to help you get paid on time.
Bring your payment terms into the 21st century
Yes, we’re already 17 years in the new century, and yet, it is possible and still common to see small businesses asking to be paid within 30 days of invoicing. The days of cheques are long gone and so it’s time to adapt the payment terms as well.
Indeed, getting a signature to approve payment certainly doesn’t take 30 days. Reduce the payment terms to seven days (7 days) for new clients. Once the clients have been with you longer you can increase the payment terms, but with the terms & conditions stating that should payments be late then the clients will be required in future to pay within seven days from invoice again.
Of course, you will still have clients who prefer the 30 days, wouldn’t you? But, flexibility is recommended. The very important and loyal clients can stay for the 30 days period, but new ones should preferably be on the seven day payment period unless they specifically negotiate or request otherwise.
Get paid on time with incentives for on-time payment
Imagine a DVD store gives you an incentive to return rented DVDs before 16h00 the next day? Say the incentive is credit for a free category movie, would you risk returning it just on-time or a bit late? Or would you rather add get free credits to be used later for a category movie? Most people will go for the early-bird return credit. The same goes for everything else.
Add incentive when doing your small business invoicing. Late invoice payment penalties are not very popular with clients. Positive reinforcement training has a better effect. So next time you do your small business invoicing, follow the positive approach with a discount for early invoice payments. Now, you have the attention of clients. Everyone wants to save money and the 5-10% discount will ensure faster payment:
Total due: R500.00
Early discount: 10% if paid within 7 days.
Save 5% if paid before 1st November 2017.
That said, also add penalties for late payment. In this way, the client makes the choice of early, on-time or late payment.
Small business invoicing – Itemize for clarity
Don’t leave room for guesswork. If anything is unclear the client will have an excuse to not pay or drag out the process with phone calls to get clarification. Best way to go about: itemize:
- Description of the work task done/product sold.
- Date of work/product delivery.
- Product quantity/hours worked.
- Item price per unit.
- Total item price.
- Discounts that apply.
- Total of all work/products.
- Total for work/products.
- The due date for payment.
- Discount if paid early.
- Total after discount for early payment.
- The penalty for late payment.
Always include payment terms, the invoice date, invoice due date, late invoice payment fees and early invoice payment discounts.
Meet client requirements
Sure it is your business and you don’t appreciate people interfering with your small business invoicing function, but do ask if the company has any special requirements for payment of invoices. Be sure to meet those requirements, unless you don’t mind waiting another month for the next payment run.
Small business invoicing must be prompt
Don’t wait until you are back at the office to invoice if you just did a call-out. Invoice there and then. This is possible with the conventional invoice book, which should always be in your car. Small business invoicing is even easier when you make use our cloud accounting services. We make it as easy as 1-2-3 to get paid faster with our online invoicing services and smart apps.
Go to our online contact system for more information on how you can benefit from our affordable small business invoicing, accounting and tax calculation services in South Africa or download our app to help you get paid faster.