You work hard, so getting paid shouldn’t be.
Cash flow is the lifeblood of any business, and timely payments are key to keeping things running smoothly.
Here are our top ten tips for getting your invoices paid on time.
1. Set clear payment terms
Before you start working with a client, make sure you have clear payment terms in place.
Tell them the payment due date, how they should pay you, and if there are any fees for late payments.
Communicate these terms upfront in writing and include them on every invoice you send.
2. Send invoices promptly
The quicker your client gets the invoice, the faster they can pay.
Try to send invoices right after delivering goods or services. Using invoicing software can help you automate this process and ensure accuracy.
3. Use professional invoicing software
Invoicing software helps you create clear and easy-to-read invoices.
It also lets you keep track of which invoices are paid and which are not. Features like automatic reminders and connections to accounting systems can streamline the process. Popular options include Quickbooks and Xero.
4. Offer several payment options
Make it easy for your clients to pay you by offering different ways to pay, like:
Credit cards
Bank transfers
Checks
Online payment systems like PayPal.
The more options you offer, the easier it will be for clients to make prompt payments.
5. Send payment reminders
If a payment is overdue, send a polite reminder.
Sometimes, clients just forget, and a friendly reminder can help to get things moving. Use invoicing software to set up automatic reminders so you don’t have to keep track of them yourself.
If reminders don’t work, try calling the client. We know nobody likes this type of call, but to make it easier, try calling early in the day and remain polite and professional but firm.
6. Encourage early payments
Encourage your clients to pay early by offering small discounts for early payments. For example, 2% off if they pay within 10 days. This can motivate clients to pay sooner, improving your cash flow.
You can also charge a fee for late payments. This is a statutory entitlement. The Small Business Comissioner offers a handy interest calculator to work out what you might be owed if a client pays late.
7. Build strong client relationships
Good relationships with your clients can help you get paid faster.
Keep in touch regularly, understand how they handle payments, and be quick to respond to their needs. When clients like working with you, they may be inclined to prioritise your payments.
8. Use invoice finance
To get your invoices paid faster, you can use an invoice finance provider like Penny. Here’s how it works:
Register an account
Submit your invoice
Get paid within 24 hours.
When your customer pays, we get paid.
This helps you get cash quickly without waiting for lengthy payment terms.
9. Implement a collections process
For consistently late payers, have a collections process in place.
Start with friendly reminders. If payments are still overdue, use more formal methods to collect the money. Be firm but fair, and keep track of all communications.
10. Consider legal action as a last resort
If a client still won’t pay after all your efforts, you might need to take legal action.
This should always be a last resort because it can harm your relationship with the client and incur legal fees. Think carefully about whether the amount owed is worth the potential cost and consequences.
Getting paid on time is important for a healthy cash flow. By setting clear payment terms, offering different payment options, and considering invoice finance, you can streamline your payment process and get paid promptly.
Frequently asked questions
What should I do before starting work with a new client?
Make sure you set clear payment terms before you begin.
Tell the client when they need to pay, how they should pay, and if there are any late fees. Share these details in writing and include them with every invoice.
When should I send my invoices?
Send your invoices as soon as you finish the work or deliver the product.
The sooner the client gets the invoice, the sooner they can pay.
Why should I use invoicing software?
Invoicing software helps you create easy-to-read invoices and keeps track of which ones are paid and which are not.
It can also send automatic reminders and connect with your accounting system.
What payment methods should I offer?
Offer different payment options to make it easier for clients to pay you. This can include:
Credit cards
Bank transfers
Cheques
Online payment systems e.g. PayPal
What if a payment is overdue?
Sometimes, clients forget. Send a polite reminder if a payment is late.
If reminders don’t work, try calling the client. Be polite but firm.
How can I encourage clients to pay early?
You can offer a small discount for early payments, like 2% off if they pay within 10 days. This can make clients more likely to pay sooner.
Alternatively, you can charge a fee for late payments.
How can building relationships help with getting paid?
Good relationships with your clients can lead to faster payments.
Stay in touch regularly, understand their payment process, and be responsive to their needs. This can make clients more likely to prioritise your payments.
What is invoice finance and how does it work?
Invoice finance helps you get paid faster. Here’s how:
Register with an invoice finance provider.
Submit your invoice to them.
Get paid within 24 hours.
When your client pays, the provider gets the payment. This way, you get cash quickly without waiting for your client to pay.
What should I do if clients are consistently late with payments?
Have a collections process in place. Start with friendly reminders, and if payments are still late, use more formal collection methods. Keep track of all communications and be fair but firm.
When should I consider legal action for unpaid invoices?
Legal action should be a last resort. It can damage your relationship with the client and involve legal fees.
Consider whether the amount owed is worth the potential costs and consequences before going down this route.
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