5 must-know tips to effectively keep track of your invoices
No one likes to follow-up on late invoice payments. However, sending payment reminders is an essential task that must be undertaken on a consistent basis, for failure to do so can result in a negative cash flow position in your business.
On the other hand, proper invoice management encourages stable cash flow and helps ease bookkeeping stress. This is why having a professional invoicing system is crucial to the success of your company. Another important factor is, by knowing how to effectively keep track and manage your invoices makes it far easier for you to apply for invoice factoring.
To make your invoicing trouble-free, here are five must know tips that will help you organize and keep track of your invoices.
1. Send Automatic Payment Reminders
A good invoice management software system lets you send out automated follow-up payment reminders to your clients. These reminders may include how much they owe and the deadline for payment. You’ll then be notified if your client doesn’t pay within the agreed date. You’ll also be notified once you receive the payment.
Using an efficient invoice management software can also save you loads of time and effort. Since your payment reminders are automatically sent, you don’t have to keep checking to see if your clients have paid you, since payments received are likewise automatically recorded.
Additionally, you don’t have to contact your customers, unless of course they don’t pay you. The automatic payment reminder feature helps organize your invoices and cash flow.
2. Simplify the Payment Process
A simplified payment process makes it easier and more convenient for your customers to pay their invoices. If you want effective invoice management and on-time payments, make the payment process easier and more accessible for you and your clients.
Find an invoice management solution that lets you update your invoices in real-time. Another option would be to create a spreadsheet or document where you and your clients can access and review it at the same time. In this way, you can see when your client is looking at and becoming aware of their invoices.
Other than real-time invoices, you can also send them via email or text. Another good idea is to offer multiple payment options to your clients, such as online payments, Apply Pay, Google Wallet, as well as debit and credit cards. Having numerous payment options encourages clients to pay sooner rather than later.
3. Automate Invoice Processing
Technology has made all of our lives easier. It’s now more convenient than ever before for you and your customers to automate the process of invoicing. In doing so, you automatically transfer the necessary information to your clients. This is extremely beneficial for a business that struggles with invoice management or for those who procrastinate in compiling and sending invoices.
You can automatically transfer data processing, verification, resolution, approval, payment, and storage. By automating your billing process, your invoices can be sent and verified to all your clients in just a few clicks.
4. Implement a Late Payment Penalty
If your clients still do not pay on time after sending payment reminders, simplifying the payment process, and automating your invoice processing, you might want to implement late payment penalties. There are different ways to penalize clients, but be careful to do it in small increments.
You can charge a late fee which could increase every 15 to 30 days if a payment has not been received. However, some states have a strict limit on how much you can charge, so be sure you’re up -to-speed and know what the rules are prior to applying a penalty.
It’s best you include details about late payment penalties in your contract. State the terms of the penalty and ensure that the other party acknowledges them. This keeps you legally safe in case your clients decide to challenge your terms and conditions.
5. Always be Professional and Polite
It’s important you maintain an air of professionalism in every aspect of your business, including invoicing. Even when dealing with a “worst case” customer, best to always remember that good manners always serves you better, especially in the long term.
When you’re wording your invoices, don’t forget to insert “please” and “thank you”. For example, if you’re asking your client to pay on a specific date, write, “Please pay by August 8, 2020.”
Or, “Please pay 50% within seven days of receipt.” Always remain professional as you build and maintain a lasting relationship with your clients.
Check Out Invoice Factoring for Small Businesses
Cash is still king in every business establishment, regardless of industry or association. If you’re running low on working capital, there’s another viable option you can tap into:
It’s called invoice factoring. This is a process where you can “sell” your invoices to third-party companies in exchange for immediate funds. It’s definitely worth your time and effort to further investigate this option and discover the benefits associated with it.