![]() Step 5: Send a Polite Payment Reminder Email And when clients know you take the payment process seriously, they're less likely to ignore your invoices. Sending invoices promptly ensures that your products or services are fresh in the customer's mind and reinforces the idea that you don't work for free. Not only do accurate invoices ensure that you're billing your customers correctly, but errors on invoices can lead to invoice disputes, payment delays, and unhappy clients.Īlso, make sure you're sending your invoices on time-either as soon as you've finished work for the customer or on a regular cadence (i.e., weekly or monthly). So make sure every invoice you send has the right contact information, invoice number, product or service description, amount due, and payment due dates. ![]() Step 4: Make Sure Your Invoices Are Accurate and On TimeĪccurate invoices are essential for getting paid for the products or services you provide. Customers enjoy being rewarded for their loyalty, and they may be more likely to do business with you in the future if they feel appreciated. But they can incentivize customers to pay well ahead of the payment deadline, which can improve your collections.Īdditionally, offering early payment discounts can help build strong customer relationships. ![]() When you provide a discount for early payments, you reward customers for promptly paying their invoices.Įarly payment discounts are usually small-just 1% to 2% of the invoice amount. Step 3: Consider Offering Early Payment Discounts ![]() When you offer a variety of payment options, it's easier for customers to pay you, and there's less of a chance that your invoices will become past due. For example, some prefer to pay by check, while others want to make an online payment via credit card, PayPal, Venmo, or other electronic payment methods. Step 2: Offer Convenient Payment Methodsĭifferent customers may have different payment preferences. For example, you might list how much is 1-30, 31-60, and 90+ days late. This will help you avoid any confusion or misunderstandings down the road.Īn invoice's due date should also be clearly stated on each and every invoice, along with any overdue sums and how long they're past due. Include this in your contract (if you have one) so customers know the number of days they have to pay once they receive an invoice. When you start doing business with a new customer, be clear about when payments are due. When collecting outstanding invoices, an ounce of prevention is worth a pound of cure, so here's a step-by-step on managing your receivables-both before and after they become past due. How to Handle Overdue Invoices in 10 Easy Steps Savvy business owners create invoicing and collection processes that address outstanding invoices long before they become past due. While small business owners tend to focus on past-due invoices, healthy cash flow starts long before an invoice becomes overdue. However, if you send a customer a bill due on March 30 and it's April 15-then that bill is overdue. These terms are often used interchangeably but are different.įor example, if you send a customer an invoice that's due on March 15 and it's March 10, the invoice is outstanding but not overdue. Outstanding invoices are unpaid bills that aren't past their due date, while overdue invoices are unpaid and past their due date. For example, according to GoCardless, it's common practice for construction businesses to ask customers to pay within 90 business days, whereas cleaning services expect immediate payment or within two weeks. For example, if your contract requires customers to pay net 15-meaning the customer has 15 days from the invoice date to submit their payment-then on the 16th day, that invoice would be overdue. That invoice due date depends on your payment terms. What Is an Overdue Invoice?Īn overdue invoice is an invoice that hasn't been paid in full by a specific date. So, here's how to avoid letting overdue invoices kill your cash flow. Before long, you might have trouble paying wages, rent, and other day-to-day business expenses. As a small business owner, late payments can be extremely stressful because when customers don't pay on time, your cash outflow can be greater than your cash inflow. In fact, according to the Export-Import Bank of the United States, as much as 60% of invoices are paid late. But, unfortunately, some customers take a little longer than others to pay up. ![]() If you're a small business owner, you know that one of the most important aspects of staying afloat is collecting payments for your services or products. ![]()
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