Invoices are slips that tell you who is to be paid and when they expect that payment. Invoices that you issue make sure that you are paid within the given time. However, if you feel that your buyers don’t pay you on time or you need the payments to be done sooner, here are a few ways you can do so.
Miscommunication and Errors
Most of the invoices are prepared manually. Sometimes, there can be problems associated with the invoice due to a lack of time and care. The vendor later has to face difficulties in the process. This increases the price and involves a lot of time too. This can also have a lot of errors in the invoice when prepared manually.
There is an easy solution to all this. If the errors are happening manually, you can digitize the entire system. This can be a bit hard with pre-established companies, so another way can be to clear out the terms and conditions so that your clients can understand them easily. Digitization won’t just help clarify the invoice and speed up the process but will also save you a lot of time and money. It will be like killing two birds with one stone.
The Time Taken to Create the Invoice
The sooner you prepare the invoice, the sooner you will get the payment. However, even after a certain invoice is created, a huge margin of errors can occur in the creation of the invoice. This time taken to rectify all the errors is called the reviewing period, and you need to cut down on it to create a better invoice. So the question is, how can you cut down on the reviewing time of your company? Here’s how.
The very first solution that comes to mind is digitization. Digitization will make sure that the errors in the invoice are minimal and hence need a low or no reviewing period. This ensures that you can invoice immediately and get the payment quicker. The second way is to make simple invoices: the simpler the invoices, the fewer errors, and the lesser the review period.
The Mode of Payment
Not every buyer you have will be able to pay you the way you tell them to without taking some time. If you want to eliminate this constraint of not paying via their preferred mode of payment, the solution is quite simple. You can accept all payment methods, whether it is through cash, DD, cheque, or online bank transfer. This will increase the number of ways to receive your payment (which can be a hassle to check) and increase the number of customers you will retain.
You can also allow automatic payments. This means that you will specify the date and time you require the buyer to pay you, and they can do so without even lifting a finger. Their software can easily make the payment without them even remembering that they have an invoice to be paid out. This is a blessing for all buyers who have automated their AP workflow process.
Lack of Incentives
One big reason you might not be getting paid earlier than you expect is the severe lack of incentives. You might be thinking to yourself why you need to provide incentives to get the money. The reason is simple; your clients might feel more motivated if they see a slight discount (not much, just 1 or 2%) if they pay the invoice before a certain number of days. This is called dynamic discounting, and it is the best incentive you can give your buyers.
You can also go the other direction and impose a late fee if the invoice is paid late. You might already have such an imposition, but you can also increase the late payments to ensure that your clients pay on time. You also need to follow up on late fees, though. There can be some trouble on the client’s side that you might need to clarify to make the payment. It is the money you need to receive, so you might need to work a bit for it.
In conclusion, if you want your money to be paid on time, there are a lot of steps that can be taken to ensure the same. First, of course, you need to take action and choose whether you want to get paid early or let things rest easy as they are, but if you are reading this article, you probably want the former. Hopefully, you gained something from this article to apply to your company.