How to Fast Track Invoice Payments

We want to speak with the founders and managing directors of companies that provide client services. If you offer services, you have likely experienced invoice-clearing delays at least once. In this article, we will share project management tips aimed at helping to expedite invoice payments before they become a problem.

Late invoice payments pose a significant challenge for many small businesses. Many small business owners depend on timely payments to sustain their cash flow, which may not be as critical for larger companies with more substantial financial safety nets.

For some businesses, multiple late payments can lead to severe consequences and create a significant knock-on effect. They may find it hard to pay their suppliers, employees, or any contractors they work with. In this article, we provide a set of tips to fast-track invoice payments.

Top Tips to Get Invoices Paid Quicker

Here are seven tips to speed up invoice payments:

1. Agree on payment terms before starting the project;

2. Maintain diligence with your inventory and time records;

3. Avoid complicating invoices;

4. Establish direct communication with the payer;

5. Invoice promptly;

6. Remain persistent;

7. Implement extra charges for late payments.

Let’s explore each of them in more detail.

1. Discuss Payment Conditions at the Get-Go

Be fully transparent from the beginning by outlining clear and specific payment terms. Often, payment delays stem from inadequate communication rather than ill intent. In other words, aim for utmost clarity to avoid confusion that could result in unnecessary costs later on.

Informing the client about payment conditions before starting the work sets and helps manage expectations. Even better, obtain a service-level agreement (SLA) that outlines the deadlines for clearing the invoice. This is also the best opportunity to inform them of possible consequences, such as late payment fees in the event of a breach. 

2. Keep Running Inventory and Time Records

Calculating costs during invoicing wastes time. Instead, keep a running record. This will ensure that figures are readily available whenever needed and will also prevent anything from being overlooked.

A great solution for this approach is Timesheet Portal, which automatically gathers all the information recorded in the software and produces customised invoices based on your input data.

If you notice costs exceeding the budget, keeping a running record allows you to inform the client promptly. Avoiding an unpleasant surprise at the month's end can help preserve the relationship.

3. Simplify Invoices

Present information clearly and directly to the client on the invoice. Any confusion may delay payments. Personalising the invoices with your business's logo and brand colours will also enhance your professionalism.

The good news is that it won’t cost you an arm and a leg to hire a designer for creating an invoice template. Additionally, if you have an in-house specialist, you won’t need to put additional strain on them either. The invoicing function included in Timesheet Portal software allows you to customise invoice templates to match your corporate colours and layouts with just a few clicks.

4. Address the Payer Directly

The payer and the person who ordered the work are often different individuals. Your invoices may have been misplaced during their journey to the responsible party for accounts. Depending on the account's size, this is often very likely.

To fast-track invoice payments, reduce the number of steps and people involved. Instead of sending invoices to your point of contact, send them directly to the individual responsible for payment. If you're unsure, call your client to obtain the contact details of the person in charge of accounts and maintain communication with them.

5. Invoice ASAP

Invoices sent quickly are more likely to be paid on time. In simple terms, when your client receives the invoice shortly after you deliver your work, it stays fresh in their mind. This decreases the likelihood of it being forgotten or delayed.

We understand that creating an invoice can be a task that you might not always have time for. That’s why Timesheet Portal offers a feature to generate and send invoices on your behalf. In other words, neither party has an excuse for why invoices haven't been sent out or processed as quickly as possible. 

6. Be Persistent

Persistence pays off! When invoices are overdue, send reminders and conduct monthly follow-ups. If necessary, call the client’s accounts department to discuss the issue. However, regardless of how upsetting the situation may be, maintain a professional tone. While issuing warnings is appropriate, avoid making threats.

Remember that a relationship is a two-way street. Its foundation is trust, and both parties must invest an equal amount of effort to nurture it. If the client frequently misses payments, you should assess whether this relationship is worth your time and effort.

7. Add Late Payment Fees

If you’ve clearly communicated the payment terms on your invoice and the client has still ignored them, you can charge interest as late payment fees. However, remember to include a warning that they may breach your SLA. Always ensure you have written proof of the client’s acknowledgement of the potential consequences.

Be warned, though, that this can severely damage your relationship with the client. It’s best to analyse the situation. If it’s a one-time offence with a valid reason and there have been no issues in the past, consider reversing the charges.

Summary

Late invoice payments impact every business that provides services. The issue is that while large organisations may not feel the effects, this can be a devastating experience for small and medium-sized businesses (SMBs). Furthermore, it often leads to additional challenges down the line.

The best way to expedite invoice payments is to create the appropriate environment. The key is to prevent delays from happening in the first place, whether by drafting SLAs, informing clients about late payment fees, or relying on software for invoice generation and distribution. You can take charge of this situation.

Not sure where to start with habitual late-payers? Reach out to us; we’ll steer you in the right direction.