As month's end approaches we, along with many other businesses, have invoices on our minds. In this post we present a few tips we’ve learned from our small business clients over the years that can help a small business ensure that their invoices are getting paid on time, or even early.
1. When prospecting new business, segment by the ability fit into your invoicing system
Whether you’re just starting out in business or you’ve been around for a few years, it is tempting to take any and all business that comes your way. You can save yourself time and headaches if you do a little homework early in the sales process. Take some time to gather intelligence on the businesses you’re going after, try to figure out their cash flow situation. If you think you may have trouble being paid in a timely fashion you’ll need to decide whether the business is worth the wait, or if you should find a more reliable customer.
2. Reconsider your billing cycle
Consider playing around with your billing cycle. No matter when your invoice is sent, you want to be on top of the pile when it comes time to pay. Instead of invoicing on the first of the month just like everyone else your client deals with, why not bill in the last week of the previous month? Depending on your business and how your client deals with invoices you might shave days or weeks off of the wait between sending an invoice and receiving payment.
3. Incentivize the behavior you want to seeTake a page from the marketer’s playbook and make payment of an invoice an attractive option. How can you make paying the bills attractive you ask? How about incentivizing early payment? If you can afford it, this strategy can increase your rate of on-time and early payment. Offer a small but attractive discount on your normal rate for bills paid before a certain date. Enter all clients who pay early into a monthly prize drawing. This strategy can not only help you get paid in record time, but also sets you apart from any competitors. If you have a choice between two similar options at similar prices, the opportunity to win some free stuff or get a reduced rate might make the difference in who you choose.
The sending and payment of invoices is one of those mundane business tasks that most people give the minimum of thought to. Having a creative think about your invoice process could save you some time and help you ensure that you are getting paid what you owe more quickly than you ever have before.