No matter what kind of business you have, it’s essential to ensure that payments come in on time. Success and a salary often go hand-in-hand when it comes to meeting deadlines, chasing after tight and fleeting windows of opportunity, and maintaining employee satisfaction in the workplace. The downfall of many companies and frustrations of business owners lies within the struggle of chasing after late payments, especially when they happen repeatedly.
A foolproof solution for ensuring payments come in on time is to have a proper and thorough plan in place. A clear plan ensures that the right steps are taken long before payment becomes delinquent. Aside from having proper payment plans, it’s crucial to consider how you will deal with customers who fall behind on payment deadlines. Laying the right framework for your invoices will make a difference in your business’s chances of attaining financial success and security.
To ensure that your business runs as smoothly as possible with every payment, we’ve prepared a list of tips and tricks that you can employ in your invoicing plan:
A common hiccup that many businesses encounter is losing or damaging the paper invoices essential for proper financial tracking. With electronic invoices, however, you can have a copy that will never be forgotten or misplaced. Additionally, digital copies are easy to reproduce over and over again.
Once you render a service, make sure to send an invoice right away to merge the submission of completed work and payment as a uniform step. Putting the two steps together can make a customer realize that the step isn’t complete until they complete both actions. By creating a psychological incentive that inhibits not paying on time, your business’s accounting can be kept in check.
Most customers fail to pay on time simply because they don’t know what to do when they see “net” terms such as “net 30” or “net 60” on their invoices. Although such terms are common in the business world, the average consumer may not be quite as up-to-date on the jargon. Simplify things for your customers and let payments come in on time by saying “payment due within 90 days” instead of “net 90”.
An invoice hack that you probably aren’t aware of is that you can encourage customers to pay at least 60 percent faster by incentivizing the act of payment. Most customers fail to pay on time simply because they don’t see a reason for paying early if they don’t have to. However, by giving specific incentives (such as a five percent discount) for paying a certain number of days early, you’ll be able to generate a spike in early payments at only a fraction of the cost. Before implementing this hack, ensure that your accounting is prepared to forecast income and profit with the incentives handed out for early payment. Factoring the discount is crucial to ensure that there aren’t any surprises during the monthly financial report.
One of the most underrated ways to ensure that your payments come in on time and your accounting stays on track is to request for payment before rendering any services. Asking for payment before giving service is also a way to protect your own business and its assets. If a customer fails to pay, then there’s no need to worry because you won’t lose anything in the process. Following a payment-first-services-after rule can also help train your customers to pay right away without forcing them to do so.
An effective invoice plan is the life force of a business that relies heavily on timely payments. The key to success as a company lies within collecting payments on time, so it’s in your best interest to have a foolproof plan in place.
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