How to get your invoices paid faster

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In the world of busy world of SMES and entrepreneurship, unpaid invoices and 60-day payment periods can really take their toll on a fledging business. Whilst we all hope that our clients will pay our invoices immediately, we regularly have to wait several days or weeks for a payment to come through and for small companies and freelancers relying on the income, this can have a truly negative impact on their cash flow.

Whilst some large companies will always have payment policies in place, there are some simple things you can do to make your payment expectations clearer and get the client to make your invoices faster – as Funding Invoice explains below.

Set payment terms on the invoice 

Adding payment terms to your invoice indicates to the client that you expect payment within a certain number of days e.g immediate, 5 days, 10 days etc. Whilst it is still up to the client to pay you at their own discretion, by adding a number days shows that you have an expectation to receive your payment within a certain timeframe and you have a level of expectation.

It is also worth making your payment terms very clear in your initial contract with the client. Companies and individuals are not always in a rush to make a payment, regardless of how well you have delivered the finished product. But stating from the contract stage that you have payment terms and assuming they sign the agreement, they should indeed honour it.

Provide the correct template and bank details

Particularly in large organisations, they may expect invoices to be presented in a certain way or include things like the company address, VAT registrations number or PO Box number. If you find that the accounts team only pick up your invoice for the first time after 30 days and they feedback that it is missing some information, you will have to correct it and maybe wait another few days or weeks for them to pick it up again.

So before sending your first invoice, be sure to ask for any specific requirements that need to be added to your invoice.

In fact, it may also be worth adding your international bank details too known as the IBAN number. For some companies that handle their accounting abroad, they will need an international number. There is no limit on the information that you can provide in an invoice, so you can certainly include this too. 

Speak directly to accounts 

If you work with the management or marketing team, the likelihood is that you are not dealing with the exact person that physically pays this invoice. This is usually the accountant or accounts person in the organisation.

However, when you send or hand over an invoice to your direct contact, you are assuming that they will pass it onto accounts and follow up payment – but the chances are, they have enough on their plate and it is not going to be on their list of priorities.

Therefore, it is best to have a direct contact with the accounts person and be able to send your invoices and follow ups directly to them instead. This will avoid any invoices accidentally not being passed on and should get you one step closer to the payment being completed.

Enable online payment

Whilst traditional invoices have been paid by cheque or online BACS payments, we know have a host of online payment facilities and gateways that can accept online payment. This might be a good option if you have individual clients or small companies that might want to pay by credit card. Using Paypal or XERO, you can set up an online invoice and send the customer a link to make payment. Being just one click away could speed up the whole process compared to a manual payment.

Send a follow up letter

If your invoice has not been paid within the typical timeframe, it is common to send a few follow up emails or phone calls. You should be careful not to pester the client and following up every few days or once per week is sensible.

A letter can always be an effective way to follow up – since giving the debtor something in hand can always give them another gentle reminder. The first letter should not be aggressive or threaten legal action, but instead just clarify that you expected payment on a certain date that has not materialised. It is recommended to also include a copy of the invoice in the letter as a reminder. 

If several weeks go by and still there is no payment or correspondence, you can turn up the heat by stating that you will be following the advice of your lawyer if not payment is received within a certain timeframe. In certain cases, you can add interest for late payments and get professional help from a debtor – you can read our guide about your invoice rights here.

Be calm  

Unpaid invoices can be the most frustrating thing for any small business. However, it is always best to be calm and communicate with the client regularly to avoid any disagreements and lose the opportunity for potential work.

At Funding Invoice, we are a specialist invoice finance company allowing companies of all sizes to receive an upfront sum on their unpaid invoices. Popular with fashion and fast moving consumer products, we are able to provide 75% to 80% of the total invoice fee once the invoice has been successfully verified. For more information, contact us here.