You’ve done your background checks and credit risk assessment and welcomed your new customer into your supply chain. Now it’s time to send your bill—with best practice invoice features.
A well-designed invoice should look great, but also serve its two important functions: provide a statement of goods or services provided to a customer AND state the terms agreed between you and your customer. A good invoice, backed by a systematic process, can greatly improve your collection time.
1. Invoice immediately
Every day that a bill goes unpaid is costing your business money—it’s cash not flowing through your business. Issue your invoice as soon as the order is made or delivered. Give your customers the opportunity to pay you quickly (and before more invoices arrive to compete for their attention). Remember: the probability of collection decreases the longer an invoice ages.
2. Send your invoice to the right person
Send the invoice to the person who can action it (usually someone on the accounts team), and record those contact details in your Customer Relationship Management (CRM) system. (If you have to follow-up your unpaid invoice later, you need to know who to contact.) Make a phone call and get to know the person who deals with your invoice. Ask who looks after your account when that person is on leave. The extra effort will be worth the time you save chasing unanswered emails and phone calls.
When sending your invoice via email, include your business name and ‘invoice’ in the subject field. You’ll get a better open rate!
3. Accept online payments
Make it easy to pay you; offer a number of payment methods. Most businesses prefer to transact online now, including making payments online. If your customer has to dig out a cheque book, envelope and stamp in order to settle their account, expect delays. Offer your customers credit card and direct debit options. A ‘Pay Now’ button on your invoice or email, linking to your online payment gateway means that your customer is one click away from depositing money into your bank account.
4. Include all relevant information, correctly
Check your invoices before sending or risk an extended payment time from your customer. Any errors or omissions in itemisation, dates or quantities can be queried by your customer and you’ll waste time re-issuing a corrected invoice. Legally binding terms and conditions should be printed on all invoices but especially those involving substantial amounts of money.
5. Be prepared to systematically follow-up unpaid invoices with reminders to pay
Have a pre-planned escalating course of action ready to go…and a method to enact it. Your customers will soon learn that your business consistently follows up all unpaid invoices, large and small—with consequences. Your plan should include your intended communications, mode of reminder (email, SMS, post etc.) and time frame. Automating your debt collection process will systemise this, allow you to send a large volume of reminders and will save on labour and administration costs. (See a sample plan in the blog post Best practice collections: how to simply get paid on time)
And now some best practice features for your invoice:
Click here to download this template in high definition.
One last tip to increase your likelihood of prompt payment: combine best practice invoicing with best practice collections and automate to accelerate the process.