Setting up a solid invoicing system can really help making sure that those sales you make actually result in you being paid. Otherwise, roadblocks like disorganized billing records, lost invoices and difficulty collecting receivables may be in your immediate future.
If you’re looking to set up a system, we’ve got some tips for you.
Use what’s already out there
Lucky for you, invoicing options are very accessible. If you sell using an ecommerce platform, most sites will automatically create invoices for you and your customer. If you need to do things the old fashioned way, there’s a ton of free invoice templates online. The most important fields to fill in (besides the actual cash amount) are the invoice number and date—this makes tracking invoices much easier.
Make invoicing immediate
People pay, your business continues. It’s a pretty direct relationship, which is why it’s so important that your customers pay on time. To give people the hint to pay ASAP, make sure you’re consistently invoicing right after you’ve delivered your product or service. If you invoice quarterly or at the end of the month, you’re basically forced to hold your customers’ debt.
Give the people options
When you give your customers the options to pay using credit and debit, you’re creating a space of freedom of choice for them—which leads to greater customer satisfaction. If you can give them a choice, do it. But once you’ve chosen the terms of a billing system, stick with it. Consistency helps maintain solid customer relationships, avoid misunderstandings, and encourage customers to pay on time.
Reward or penalize payees
Giving a little incentive can go a long way. Many businesses encourage customers to pay on time with an early payment reward or discount, or a small percentage off the pre-tax cost if the invoice is paid in seven business days or less.
Some businesses go the other way and charge late fees if invoices aren’t paid on time. If you’re going this route, just make sure that all late fees are clearly outlined in your invoice so your customers are aware.
Follow up ASAP
Dealing with unpaid accounts can be intimidating, but with a system in place it can become part of your process and less of a hassle. Set up some meaty guidelines so you and your customer are aware of the process. Having collection letter templates makes it easier to send those out, and if you set up a series of time periods when each letter would be sent out, you’re golden! All you’ll need to do is press “send.”
Think it through
It’s 100% okay to be a bit OCD when it comes to documenting. In fact, you should definitely record every past due notice you send, the customer’s responses, and anything else relevant.
When it comes to crafting your past due notices, be thinking about how and what you want to communicate in each letter and adjust the tone based on that. So, for that first letter, speak in a friendly tone—they may have just forgotten and need a little reminder. And as the letters go on, grow firmer. For the last communication (we suggest the fourth being the last), send a formal letter demanding payment within 10 days or legal action will begin.
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