How many times have you sent a client past-due invoices, only to hear nothing back?
Small-to-medium-sized enterprises (SMEs) in the U.S. were owed $825 billion in 2016, according to figures released by invoicing financing company Fundbox. And the value of funds tied up in unpaid SME invoices is equivalent to 5% of the GDP!
If you have late payments from your clients, you aren’t alone. In fact, just 30% of businesses in a recent survey by YouGov said all their invoices had been paid on time.
Past-due invoices can have a crippling effect on your business. When a small business isn't paid on time, it can’t take on new projects, hire new employees, or scale very well. And nonpayments can negatively affect the company’s finances.
Top 5 tips for avoiding past due invoices
It takes the average small business 21 days to get paid. And 81% of small business invoices are 30 days past due, according to Fundbox.
Past due invoices may seem like a fact of life, but with a little preparation, small businesses can reduce the frequency and impact late payments might have.
Consider these five tips to avoid late payments:
Track payments and account notes
This data will allow you to identify and make informed decisions about clients with continuously late payments.
Customize billing methods
Catering to your clients’ needs will make it easier for them to pay on time.
Maintain a set billing schedule
Establishing a schedule will help clients anticipate invoices.
Chase late payments early! Prompt actions can help give you enough time to resolve the situation. Consider automated reminder emails with preemptive warnings.
Use the ‘carrot and stick’ approach
Demand interest on late payments. Or consider rewarding customers who always pay on time (or early).
Technology can cut your billing time in half
The good news is, there is a lot of great technology available to help businesses process invoices efficiently. In an interview with PYMTS, Fundbox VP of Marketing Jordan MacAvoy said:
“Electronic payments, once an invoice is approved to get paid, are a great way to reduce, by a week or so, the time it takes small businesses to get paid, as opposed to something that goes through paper mail.”
But expediting invoicing is just one part of a seamless billing process. You should consider using software that helps you with the entire billing process.
Core Billing software can cut your billing time in half and improve cash flow. It allows you to bill the way you want with a variety of billing methods. It’s possible to bill one client hourly, someone else fixed and another on retainer.
And if you need help remembering when to bill, you can also process bills in batches or automatically on a pre-set schedule. Plus, Core tracks payment history, key historical data, and account notes, so you can make informed decisions based on data.
Other features include the ability to:
- Tailor communications with customizable invoice templates
- Send multiple invoices in a single email
- Choose from automatic billing methods like automatic, progress, manual and more
Past-due invoices are not inevitable. With the right preparation, you can prevent late invoices from hurting your business. Get ahead of the curve and set your business up for success with Core Billing.
Start your free trial of Core today!