Invoicing can make or break a small business.
Well, I guess you need to get sales and customers first. Then you can worry about invoicing.
But for small businesses, invoicing is the base for all cash flow. Get a customer that is out of town for a few weeks and things can get tight. Get an issue out of nowhere when the invoice hits the spam folder…now you’re mad and then the customer is mad when you blame them.
Here are a few tips to help you avoid these issues and more…
1. Ask For Auto-Pay
People are comfortable with auto-pay. Most of our bills are auto-pay. Utilities, phones, cable, etc. It’s all auto-pay. People are able to check their bank accounts and credit card accounts on their phones. They check it regularly. Even businesses.
Find an invoicing solution or payment solution or both that allows you to sign customers up for auto-pay.
Try to get all new customers to sign up. Tell them it’s how you do things. If they have qualms, let them know that they can always opt out.
If you have existing customers that don’t use it, send them reminders every few months and especially around the first of the year to get them on auto-pay. Even try to offer them a discount to incentivize them to change.
It’s probably more for the customers that are a little inconsistent with their payments. Those that are consistent you probably don’t need to push to get on auto-pay.
2. Get The Accounting Contact Info
When you sign a new customer up, especially in the B2B world, ask for their accounting department contact’s email address and information. That’s the person you want receiving your invoices. Then reach out to that person to introduce yourself. Tell them how your invoicing works. Ask them how they typically pay.
Over the years this has been the best strategy for me. Get to know the accounting person. They handle the money and they make sure things get paid on time.
3. Ask For Payment Terms
On the note with the accounting contact is the important point about asking for the terms that the customer uses. Most pay “on receipt” or right away. Or really within a few days. And that’s never an issue. Then you don’t even have to tell them what your expected terms are.
Others are 30-days. That’s very common. But if a firm tells you 30 days make sure you document it on your records and plan for it. If they are consistent every month with 30-day terms then there are no issues. If they are inconsistent it’s time to remind them of what they told you and look for solutions…like auto-pay, which you can even tell them you’ll auto-charge on exactly 30 days each month.
4. Ask Preferred Payment Method
You may appreciate online payments because you get the money faster. Or you may appreciated checks in the mail because they don’t require fees. What you want does matter, but it’s good to know what your client’s preferred method of payment is.
I like to make it as easy as possible for the client to pay. If they have a favorite credit card, let them use it. The same with PayPal or check or whatever.
Ask what they prefer and make it happen. Do as much as you can to make sure they’re paying you quick and on the same timeline each month or payment period.
5. Use Missed Payments As Triggers
Missed payments are frustrating. They’re often frustrating because you have an expectation and you notice when it’s missed. It stresses you out. The cash flow worries start to creep in.
On the flip side…the customer probably doesn’t even know what has happened. They have their own worries and paying you probably isn’t high on the list.
But missed payments can be used as triggers. Triggers to get clients to signup for auto-pay or to switch payment methods or things like that. Use these moments to remind the customer that there is an issue and that you want to help.
Speaking on that note…
6. Kindness Gets More Results
I find that being kind with invoicing is the best method for 1) Getting Paid and 2) Fixing Payment Issues.
It’s not always easy to be kind, though. When you’re not getting “your” money it can be frustrating and it’s easy to lash out at your customers. But that can often lead to them, at best, paying you and then leaving you, or worse, not paying you and leaving you.
Try to always give the client the benefit of the doubt. Assume that the issue lies with you and your processes. Look at how you can make it easier for the client to pay.
Are their times that clients are purposely not paying you? Sure, but it’s almost always not the case. And there is almost always something you can do…such as the using the tips here.
Conclusion
Cash flow is the lifeblood of any business. Especially a small business. Sales are obviously the first and probably most important step. But then collecting the money and invoicing comes next. Use these tips to change what you control and make sure you’re getting paid consistently and all the money you have earned.