Does your business have too many outstanding invoices? If yes, then you should know that this is an everyday struggle among small companies that operate an invoicing system.
A 2021 survey showed that 25 percent of these entrepreneurs had to wait for more than a year to get paid for overdue invoices.
Letting customers or clients pay via invoices is convenient. However, late or missed payments can hurt your business’s bottom line. This is even more true if these invoices are your only source of income. But how can you encourage and ensure prompt payment without being too pushy on your customers?
Having an effective invoice management system is the key. Find out below how you can use it to get paid on time and improve your customer service.
Customize Your Company’s Invoices
A good first impression is a vital component to developing customer relationships and sales. The same goes for sending invoices to your customers. People are more likely to recognize and trust your brand if you give them customized and professional-looking invoices. It also creates a distinction between you and your competitors.
However, personalizing invoice design is more than beautifying your bills and emails. It’s about understanding customers’ journey, which doesn’t end when they make a purchase or after you get paid. It should convey their needs and expectations and make them loyal buyers.
Be Transparent and Polite
Being clear about your invoices is crucial to collecting unpaid bills on time. Customers should understand what you are invoicing them for. Thus, don’t use industry jargon that would only confuse your customers.
You can also itemize the cost on the quote, what services you performed, and how much time you allotted to do it. Transparency helps your customers feel more comfortable paying you promptly.
An invoice management system often provides good sample invoices. But it’s better if you create your own wording that will represent your voice. Use warmer greetings and sign-offs when sending invoices to your customers. Send them a polite follow-up email if they slip on a due date. Customers will appreciate it and become more willing to pay you.
Set Up a Payment Arrangement
Customers may struggle to pay your invoice in full and on time due to cash flow issues. You can establish a payment arrangement for them. The goal is to get at least paid something rather than nothing. Customers can do it in installments instead of paying you upfront.
Talk with them and discuss an amount they can afford. Ensure to specify the period they will have to make the payments. This can help you get paid for an outstanding balance, even if it takes longer than expected.
Offer a Variety of Payment Options
Every customer wants an easy experience, including making payments on their invoices. Some may want to use a credit or debit card, while others prefer checks and cash. That’s why it’s best to offer them different payment options.
Letting customers choose a method when paying up their invoice won’t only get you paid faster. It will also help improve their experience with your brand. When customers have greater satisfaction with their purchase, they are more likely to remain loyal to your business.
Give Discounts and Charge Late Fees
Giving discounts for early payments can encourage your customers to pay their invoices ahead of time. Instead of waiting for 30 to 60 days, you can get paid faster.
Many companies offer a one to two percent discount on invoices paid in full within ten days. Make sure to inform your customers about the incentives at the point of sale so they can plan their finances.
Not everyone, however, gets motivated with an early payment discount. Some customers might need a little push to pay you promptly. That’s when charging late fees on their invoices comes into play. It will drive customers to pay you faster, or else they will incur more costs in the long run.
Use a Reliable Invoice Management System
Delivering a consistent experience with your customers is essential. That applies even in sending invoices and collecting payments. You can only do that, though, by using a reliable invoice management system. If you don’t know how to find one, here are some features you should consider:
- Enables you to set up recurring invoices
- Process payments in multiple platforms
- Create accurate and useful quotes in a few clicks
- Send alerts and reminders for due and past due bills automatically
- Offers customizable options for your invoices
- Compliant with applicable laws and regulations
The Bottom Line
Giving your customers time to pay after purchasing goods and services is an excellent way to keep customers happy and satisfied. But the tricky part is to get paid on time without compromising customer service. This is why you need the right invoice management system.
