Improving Invoicing: Simple Strategies To Save Time And Money
Improving Invoicing: Simple Strategies To Save Time And Money
(Image via Pexels) Many companies rely on invoices to get paid. While invoicing clients might seem straightforward, there are many aspects such as the timing and legal clauses that you need to get right to make sure that you get paid on time. Below are just invoicing tips that could help you save time and money.
Use a professional template
A professional looking invoice can build trust. Consider adding company branding such as your logo, clear tables and grids to itemize costs, and full contact details. Attach this invoice to an email as a PDF. By using a template, you can save time having to compose an entirely new invoice each time. This also gives each of your invoices a sense of consistency and may prevent complaints over discrepancies.
Automate bills and reminders
Recurring invoices may be possible to automate using accounting software. You can also use such software to automate payment reminders and potentially even late payment notifications if you do not receive an invoice by the payment deadline. This can save you having to manually keep track of invoices and reminders – which could be useful if you’re working with lots of clients at the same time. Reminders can also be sent out at optimum times to encourage payment (preferably 3 to 7 days prior to the due date, and then 1 to 7 days after – ideally sent out on a weekday if it’s a B2B client).
Introduce early repayment incentives
Late paying clients can be a huge headache for many business owners. Early repayment incentives can be a way of encouraging clients to settle their invoice early. This could include offering a 10% or 20% discount if a client pays a certain amount of days before the deadline. Clearly outline this repayment incentive on your invoice and consider setting a reminder the day before this discount runs out. Make sure that any discount you offer is still profitable – if profit margins are already slim, such repayment incentives may not be a good idea.
Consider late fee policies
Another way to encourage clients to pay on time is to charge late fees. In order to legally do this, you need to create a late fee policy and clearly state such terms in your invoice or in a separate terms and conditions document sent out with your invoice that clients must sign. Late fees can help you make some extra money for the inconvenience of chasing up payments, but in some cases may discourage late payments entirely. Don’t go overboard with late fees – consider charging no more than 10% of the value of the invoice. Of course, you can increase late payment fees if a client continues to not make payments, but this should also be stipulated in terms and conditions.
Know when to use invoice factoring
If you’re having serious trouble getting clients to pay up and you need the money to pay your own bills, it could be worth looking into invoice factoring. This involves selling unpaid invoices to a company who then takes on the debt on your behalf. You will usually receive 70% to 90% of the invoice’s value – so it’s possible you could make a loss if profits are slim. But it’s better than not getting anything at all and could help to keep your cashflow healthy. Take your time to compare invoice factoring companies to find the best rates.
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I specialize in sustainability education, curriculum co-creation, and early-stage project strategy for schools and public bodies. When I am not writing, I enjoy hiking in the Black Forest and experimenting with plant-based recipes.
