You know that customers will jump on any excuse to delay paying an invoice. And the invoices themselves can serve as a major one of those excuses.
If something’s wrong or incomplete or simply doesn’t look urgent enough, you might move to the bottom of customers’ to-pay pile. And that will do a number on any company’s cash flow, no matter what your size or industry.
That means it’s well worth the effort to make sure the bills your company is sending out not only aren’t standing in the way of getting your money, but may even spur customers to pay you faster.
Embracing some invoicing best practices can help you do that.
How many of these 7 are you tapping now?
To get an idea of what you should be doing — and avoiding — we consulted the advice given to folks whose livelihood hinges upon getting paid: freelancers. The tips offered to them can be adapted to even the largest corporations to increase the attention (and action) your bills receive. Check em out to make sure you’re on point:
Best Practice 1: Offer enough detail
Vague descriptions will invite a whole host of questions that could delay payment. They also could trigger problems because customers need more data for sales tax issues. So it’s worth giving a scan to invoices to make sure generic descriptions like “services” don’t appear as line items. Give folks enough info to know what they’re paying for.
Best Practice 2: Ensure they’re accurate
No one’s calculating invoices by hand anymore, but there could still be errors that hold up the payment process. Sales tax is a big issue here, too – make sure delivery charges, for example, weren’t also taxed, if they’re exempt.
If you have international customer, using the proper and accurate currency is another biggie that could send up a roadblock to you getting your money.
Best Practice 3: Include as many identifying numbers as possible
Accounts Payable professionals attend entire conference sessions on how to handle invoices without identifying invoice numbers – it definitely throws folks off. So every invoice you send should have an invoice number on it. The faster A/P can enter it in the system, the faster it gets paid.
And while it may take a little customization, if your customer has assigned you a vendor number, you might include that as well to help keep their A/P on track. It’s a little nicety that could result in faster payments.
Best Practice 4: Clarify terms
Net 30 is fine … unless you and your customer disagree on when the clock starts running. Is it when the invoice is sent? Is it the day it’s received? When it’s entered into the system? The difference could be upwards of a week depending on the mail and efficiency of your customers.
That’s why you want to eliminate any ambiguity. Rather than, or in addition to, the payment terms, you want to put a specific due date on your invoices. It’s also a smart idea to define somewhere on the terms on the back of your invoice just when your company considers the clock to start ticking.
Best Practice 5: Keep discounts from being missed
You can apply a similar strategy to any prompt pay discounts you offer. The whole point of these incentives is to get customers to pay you faster. And many want to take advantage – but some customers miss it simply because they weren’t sure when it was effective.
Consider spelling out the due date for the invoice, as well as the due date to secure the prompt-pay discount. Insider tip: Some of your peers say they have even greater success when they spell out just what the discount will save them in dollars and cents, rather than a mere percentage.
Best practice 6: Keep your contacts current
It’s best to address invoices to a specific contact person to minimize the odds your bill gets lost somewhere in a customer’s mailroom. That personal touch also paves the way for smoother customer relationships should there ever be an issue.
But you know turnover happens, which means a contact you had last month may not be there anymore. And if it’s a customer you don’t interact with on the phone very often, it may be months before you find out about a new contact person.
That’s why you might want to make it a habit to send a quarterly touch-base out with an invoice run to ensure you have the correct names of someone in A/P to direct invoices to.
Best practice 7: Offer a contact of your own for customers
Of course, communication’s a two-way street, so that works in reverse, too. Just like you want a name to attach in your customers’ A/P departments, you also want to offer the same to customers. Think about including a specific A/R contact person, along with extension and email address. That way customers will have no trouble reaching you should they have an issue with an invoice.
And they’ll have no excuse that they didn’t know who to address their concerns to.
