Completing a project or sending out a large order is always a great feeling. Getting paid on time for it is even better. But for many B2B companies, this isn’t always a reality. There’s no secret equation to ensuring prompt payment, but following invoicing best practice can help speed things up. In turn this should free up funds for covering day-to-day operations and growth.
RESEARCH POTENTIAL CLIENTS
All clients are different and it’s important to remember their situations when creating payment terms and chasing invoices. The UK is well protected and regulated regarding invoice payments, with clear laws and enforceable consequences for breaking contracts.
Other countries are not as strict, so some potential clients may be slacker at meeting agreed payment dates. That’s why invoicing best practice involves researching clients beforehand.
Look at invoice regulation in their country, whether they belong to an industry body and if they have any online feedback, wherever they’re located. Together, these things should give a sense of whether they’re likely to pay promptly or cause challenges.
PERFECT HOW TO WRITE AN INVOICE
If you’ve been operating for a while then you’ll most likely already know how to create an invoice. Even if you’re decades beyond asking ‘what is an invoice’, there’s always room for improvement. An invoice is one thing that many businesses rarely revisit to check it’s working hard enough for them. There are subtle tweaks you can make to ensure payment terms are as clear as possible.
When you know how to make an invoice work for your business, you ensure fewer invoicing errors and, in turn, less payment delays. We’ve put together a free invoice template as a straightforward invoice example that you can use or take inspiration from. You can download your free invoice template here.
AGREE PROMPT PAYMENT TERMS
Creating a contract or terms and conditions which specify exactly when clients have to pay is vital with any invoicing best practice. Standard terms require payment within 30 days, but for even quicker payment some clients may agree to even shorter periods. Your invoice template should show these clearly for every customer.
Be sure to include these in the contract too, along with a late or overdue fee. This should be sent out promptly as well to enforce it and hopefully reduce any further late payments.
SET REGULAR INVOICING SCHEDULES
Routine is the best way to ensure things don’t get missed in the daily process of running a business. Keeping a regular invoicing schedule that sends out invoices on the same date every week or month ensures customers know when to expect them.
This makes it easier for both parties to stay organised and avoid missing sending out invoices or making payments. The same can be true for setting up internal finance meetings to review invoices every week or month to see which need sending or chasing up, as well as those that have been paid.
USE TRACKING SYSTEMS
Small businesses with a handful of clients can usually keep on top of paid and unpaid invoices with a simple spreadsheet. When companies grow though, it can be much easier to use an invoice tracker system instead. Platforms like Xero and Intuit offer services like automated email reminders to help you keep on top of your invoices.
These collate all the information you hold about clients and their invoices in one place. They can be set to provide alerts when there are unpaid invoices, recording how overdue they are or when one needs to be sent out. It should make it easier to manage and send invoices out on time or early.
CONSIDER FLEXIBLE PAYMENT ACCEPTANCE
Digital payments are the quickest way for clients to pay invoices, so to encourage prompt settlements you need to offer as many options as possible. Credit card and PayPal should be two such options, as these can be processed quickly.
For businesses dealing with clients in other countries, accepting payment in other currencies should also speed things up. It avoids wasting time with either party having to convert currencies before making a payment.
CONSISTENTLY FOLLOW UP
When following up on invoice status, you might find that it takes many emails and phone calls before you get a reply. It’s important to remain persistent and ensure that your customer sticks to the agreed payment terms.
HOW KRIYA CAN HELP
If you’re finding that the delay between invoicing and getting paid is a challenge despite following invoice best practice, there are other solutions that can help. The right business finance can boost your cash flow and ease the impact of lengthy payment terms.
At Kriya we offer a few solutions for SMEs looking to strengthen their cash flow. Invoice finance can help B2B businesses get access to cash, quickly and easily, by providing an advance against outstanding client invoices. It helps you fast forward funds you’re already owed so you get on with day-to-day operations and unlock funding for growth. Or if you’re looking for an instant cash injection that you can use over and over then a flex loan is an option that works for all kinds of businesses. We think of it as working capital on demand.
This article was originally published in September 2017 and was updated in August 2021.
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