As the owner of a business, you can take several steps to improve your revenue collection process. Steps such as conducting credit and reference checks, offering good products and services, and maintaining a friendly but professional attitude with all customers can help you stay in the black.
But one of the most important tools that can help you maintain a healthy accounts receivable turnover ratio is your invoice. Used correctly, your invoice can help you get paid regularly by the due date. However, mistakes with your invoice can have the opposite effect.
As an experienced, reputable, and successful business to business collection agency we have compiled a list of invoicing mistakes businesses should avoid if they want to get paid by the due date:
#1 Not Invoicing on Time
It’s simple. Businesses that don’t invoice on time don’t get paid on time. It can happen. Perhaps there was an accounting error, or maybe your company was busy. Regardless, when some customers aren’t invoiced on time, they start to believe that sending payments on time isn’t a priority. Remember to always send an invoice immediately after the products or services have been rendered for the best results.
#2 Not Sending Reminders
You must send timely and regular reminders to encourage your customer to pay after the due date has passed. Your customer may not have seen the invoice, or they may have forgotten to pay, and a simple reminder is often enough to get paid.
If your company is consistently forgetting to send invoices and reminders, then invest in high quality invoicing software. Such tools can automatically send invoices and follow-ups on time, freeing up your resources.
#3 Using Unclear Terms and Conditions
It’s vital to use a detailed invoice with clear and concise terms and conditions. Not only will this help in case of a dispute, but it will speed up the payment process.
The invoice should include the company number, phone number, physical address, email address, client details, invoice date and number, due date, payment terms, and an organized list of products and services bought by the client. It should also include your company logo for official status.
If the invoice is vague or confusing, then your customer may need time to understand the document. They may contact you with questions about prices, quantities, or descriptions. Likewise, it’s important to sign a detailed contract. This will ensure that the business relationship gets off on the right foot.
#4 Mailing It to the Wrong Department
Double check to make sure that the invoice goes to the correct person, department, and company to avoid the delays and embarrassment. If you’re unsure, simply ask for the pertinent details. Your invoice could float around for weeks if sent to the wrong department of a large organization.
#5 Not Making Copies
You should keep a digital and a physical copy of every invoice you send in case you need to resend it. A digital copy can be quickly accessed and reprinted, while physical copies can come in handy if the systems crashes. Modern invoicing software should automatically backup the documents on the cloud for you.
#6 Not Incentivizing Timely Payments
A quick and easy way to incentivize timely payments is to add early payment bonuses and late payment fees. You can even work bonuses into the price. Likewise, late payment fees can also help you get paid faster.
Not only can such fees help you get paid on time, but they can be used as a bargaining chip. You can generously offer to waive the late payment fees if payment is received immediately.
You can also incentivize timely payments by offering multiple payment options. Most clients like to see several digital payment options. But avoid accepting old-fashioned payment mediums that are slow and obsolete.
#7 Using Harsh Language
Avoid using language that could be construed as harsh or crude in the invoice. Use friendly and professional language that motivates the customer to pay on time and buy more of your products and services.
#8 Using Lengthy Payment Terms
Gone are the days when payment terms extended to six weeks. Some companies give customers a month to pay while others require payment in as little as two weeks. Others still ask to be compensated immediately. Give your customer a respectable amount of time but keep the payment terms to a maximum of 30 days.
A good way to use the ideal payment terms with a client is to check their payment cycle. If their finance department pays invoices on the 15th then set payment terms accordingly. Also, allow loyal clients to pay in installments if they can’t pay all at once.
#9 Making Billing Mistakes
One of the worst mistakes you can make is to charge the incorrect amount. If you charge your client for a service they didn’t use or erroneously charge more than agreed, then this can delay the payment and sour the business relationship.
#10 Not Seeking Professional Help
At Summit A*R, we’ve been in the debt collection business for over twenty years. From our experience, we know that sometimes businesses need help in collecting revenue. It’s important to know when to outsource your invoice collections to an excellent debt collection agency like ours, especially if your customers have been ignoring your invoices, phone calls, and letters.
We have an impeccable compliance record, boast a success rate that’s double the industry average, and take a stern yet diplomatic approach to debt collection. Your client may stubbornly be ignoring your invoices, but they’ll find it hard to ignore our official campaign of demand letters and phone calls. Usually, debtors are happy to pay off their dues when a renowned debt collection agency like Summit A*R is involved.
There are no hidden fees and no mandatory minimums with us. We only get paid after we’ve cleared your account. So, don’t waste time. Get in touch with one of our friendly and licensed collections experts for more information.
Pick up the phone, send an email or request a callback from our contact page to take advantage of the excellent consumer and credit collection services at Summit A*R. We’re standing by to help.