If you're a small business owner, it's probably safe to say that one of your biggest challenges is getting paid on time. According to a National Federation of Independent Business (NFIB) survey, 64 percent of small businesses (SMBs) reported that invoices went unpaid for at least 60 days, with another 20 percent saying that these delays were steadily increasing.
Additionally, the Atradius' Payment Practices Barometer found that the average U.S. business waits 41 days to be paid -- not an ideal timeframe for your business. Optimal cash flow is essential for any business, but particularly for SMBs that have pressing bills to pay and require immediate funds to continue growth.
The good news is that the right combination of invoicing best practices and technology can ensure that you are paid on time, if not earlier. Recently released data generated across 300,000 Xero invoices from more than 1,400 U.S. businesses found that SMBs using online accounting tools get paid within 29 days -- nearly two full weeks faster than the average U.S. business. By receiving payments faster, these SMBs are able to profitably grow their businesses by investing in marketing, staff, office space, inventory and more.
Okay, now to the good stuff. How can you get paid faster with fewer headaches? Implement a few of these simple strategies to ensure your cash flows are always on the fast track:
Agree Ahead of Time
Be straightforward about your and your customers' expectations right from the beginning. Don't wait for miscommunication or confusion around payment to occur before outlining the specifics. Agreeing to payment terms and conditions -- before any transactions occur -- leads to minimal confusion, streamlined processes and stronger relationships.
Send the Invoice ASAP
When it comes to invoicing, absence does not make the heart grow fonder. Any delay you make in delivering an invoice directly translates to a delay in your payment. Send your invoices ASAP. This way, clients will be more willing to pay for your value without hesitation while the work result is still top of mind.
Anticipate and Reduce the Delay
Cushion the blow of late payments to your business by reducing the delay. On average, debtors pay invoices two weeks after the due date so plan accordingly. Anticipate the delay in payments from these clients and provide a due date earlier than necessary to stay on the safe side. If you need payment within 30 days, set payment terms as 13 days or less and make sure this is clearly communicated to your client.
Create Invoices That Are Clear as a Bell
Have you made yourself clear? Crystal clear? Eliminate any questions related to service and payment by over-communicating job specifics in a way that addresses your clients' specific needs. By foreseeing your clients' questions and answering them in the invoice, you can remove any roadblocks to payments. The fewer the roadblocks, the faster you'll get paid!
Be the Squeaky Wheel, It Gets the Grease
It's your money -- so don't be shy about getting it. Once the payment deadline has passed, feel free to send a gentle reminder to your customers. Emails, calls or letters are great ways to give a little nudge to your clients without seeming too intrusive. A variety of debtor tracking tools can also help.
Be on (Invoicing) Cloud Nine
Many businesses are implementing online accounting solutions that streamline time-consuming activities, such as invoicing. The cloud empowers SMBs to easily send invoices from their mobile devices or desktop computers and enables recipients to pay with one simple click of their mouse or touch of their smartphone. Accounts receivables are more effectively managed in the cloud by offering a real-time overview of your invoice status no matter where you are. And with the right online accounting software, there are useful timesaving tools to set up automated recurring invoicing and reminders for unpaid invoices.
Thanks to modern technology, there's no reason why businesses shouldn't be paid on time and in a reasonable manner. With these best practices for invoicing and debt collection, along with a touch of technology, you can make sure your company is never a day late or a dollar short.
For more invoicing tips, go to: Invoice payment terms: top seven tips