How To Deal With Late Invoices
The services or project has been delivered. As a business you have sent invoice and expecting to receive payment. Then you wait days, weeks and sometimes months and you don’t receive anything. How does one deal with such situation?
Cash flow is one of the most important aspect of a business. It is the lifeblood of the business. Without cash-flow a business cannot really function as one has to foot overhead costs.
Here are some useful strategies to be take to ensure quick payment:
Request for advance payment
Most businesses have a “pay a lump sum in advance” policy. This is basically collecting a sizeable amount of the total cost to render the service before the project commences. Advanced payments make sure Invoices do not hit overdue status.
Share gentle reminders
The are chances that it could have been a little oversight of the client. People get busy, activities steady ongoing, the client may have missed seeing the invoice. A gentle reminder on repeat would go a long way in nudging the client to make payment. Doing this has become easier with online invoicing software that is readily available on to automate reminders to clients.
Engage in a follow up call
Having a great relationship with a client ensures that you can call then over the phone and remind them to make payment. It’s also an opportunity create urgency and to find out the reason behind the delayed payment.
Send out billing statements
Sending out billing statements to clients ensures that they are looking at the status of the invoice. It informs them of their overdue payment. This should be sent in attachment of a reminder mail.
Detailed financial analysis
People lie but the records do not. Study the patterns. If one notices a particular client has the habit of not paying promptly. It is best not to render any service to them or better still warn them ahead of time to make some down payment prior and also pay on completion promptly before starting the project.
- Offer an incentive for prompt payment
One could offer a 5% off for prompt payment before completion or 1 week after project completion.
With all stated above, when you keep selling to those who pay late. You risk business failure. An advice would be to automate sending invoices and also payment reminders. It creates effectiveness in monitoring.