How to Fast Track Invoice Payments

We want to speak with 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 designed to help expedite invoice payments before they become a problem.

Late invoice payments are a significant challenge for many small businesses. The issue is that many small business owners rely on timely payments to maintain their cash flow. This may not be as critical for larger companies with more robust financial safety nets.

Indeed, for some businesses, multiple late payments can lead to dire consequences and create a serious knock-on effect. They might find it difficult to pay their suppliers, employees, or any contractors they have. In this article, we offer a set of tips on how to fast-track invoice payments.

Top Tips to Get Invoices Paid Quicker

Here are seven tips to expedite invoice payments:

1. Agree on payment conditions before you begin the project

2. Stay diligent with your inventory and time records

3. Don’t overcomplicate invoices

4. Establish direct communication with the payer

5. Don’t delay invoicing

6. Remain persistent

7. Introduce additional fees for late payments

Let’s discuss each of them in greater depth.

1. Discuss Payment Conditions at the Get-Go

Be completely transparent from the start by outlining clear and specific payment conditions. Often, payment delays arise from poor communication rather than malice. In other words, strive for maximum clarity to prevent confusion that could lead to unnecessary expenses later on.

Informing the client of payment conditions before beginning the work also sets and helps manage expectations. Even better, obtain a service-level agreement (SLA). It should outline the deadlines for the invoice to be cleared. This is also the best time to inform them of possible consequences, such as late payment fees in case of a breach. 

2. Keep Running Inventory and Time Records

You’ll waste time calculating costs when invoicing. Instead, maintain a running record. This will ensure that figures are readily available whenever you need them. It will also prevent anything from being overlooked, too.

A good solution for this approach is Timesheet Portal, which automatically retrieves all the information logged in the software and generates customised invoices based on your recorded data.

If you notice that costs are exceeding budget, maintaining a running record allows you to inform the client immediately. Avoiding an unpleasant surprise at the end of the month could help preserve the relationship.

3. Simplify Invoices

Present information clearly and directly for the client on the invoice. Any confusion could 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 to create an invoice template. And if you have an in-house specialist, you won’t have to put additional strain on them either. The invoicing function included in Timesheet Portal software allows you to customise invoice templates to align with 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 person responsible for accounts. Depending on the size of the account, this is often very likely.

The way to fast-track invoice payments is to reduce the number of steps taken and the number of people involved. Instead of sending invoices to your point of contact, send them to the individual responsible for payment. If you're uncertain, give your client a call to request the contact details of the person in charge of accounts and maintain communication with them.

5. Invoice ASAP

Invoices sent out quickly are more likely to be paid promptly. In simple terms, when your client receives the invoice soon after you deliver your work, it remains fresh in their mind. This reduces the chances of it being forgotten or delayed.

We understand that creating an invoice can be a task 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 cleared as quickly as possible. 

6. Be Persistent

Persistence pays off! When invoices are overdue, send reminders and monthly follow-ups. If necessary, call the client’s accounts department to discuss the matter. 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 evaluate 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 in the form of late payment fees. However, remember to include a warning that they may violate 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 were no issues in the past, consider reversing the charges.

Summary

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

The best way to fast-track invoice payments is to create the right environment. The key is to prevent delays from occurring in the first place, whether by drafting SLAs, informing clients about late payment fees, or trusting software for invoice generation and distribution. You can take control of this situation.

Unsure where to begin with serial late-payers? Contact us; we’ll guide you in the right direction.