If you’re jumping in mid-stream, Part 1 (with the complete list) can be found here.
5) Invoice Quicker
The lag time between when a service is performed, or a product is delivered, and when the invoice is sent out is the hidden Days-in-A/R. Your customers don’t begin the payment countdown clock until they get your invoice.
If you deliver a product or perform a one-time service, invoice the same day.
If you perform a series of services that are billed separately, invoice at least weekly.
If you perform services on a monthly basis, arrange with the client to bill on the 15th and the last day of the month. Or even better, negotiate to bill on the 15th of the month for that whole month.
The sooner you invoice, the sooner you get paid. It’s that simple.
6) Send Invoices Electronically
Sending invoices electronically solves several issues related to delayed payments.
- It saves a couple of days in transit.
- The invoice goes directly to the appropriate person at you client’s office – the paper invoice doesn’t have through your client’s internal mail delivery process.
- It won’t get "lost" on the way. It’s amazing how many invoices get lost in the mail.
- It sends the message that you’re serious about being paid on time.
Sending invoices electronically isn’t difficult. Rather than printing out a paper invoice, print to a PDF document and attach to an email. If you’re a Quick Books user, it will do this for you.
7) Invoice More Often
This is especially targeted to service businesses, including those who do Time and Materials billing.
There’s no law that says you have to invoice monthly, but that seems to be the standard operating procedure for just about every service business performing on-going services for clients. You don’t have to keep doing it that way. You can invoice weekly or semi-monthly and most of your clients will go along.
With current clients, politely inform them you’re changing how you invoice. You might get a few grumbles, but little outright hostility. If a client says they’ll stop working with you if they receive invoices more often than monthly, keep them on a monthly cycle. For the rest, invoice more often.
It’s easier to handle this with new clients. Just inform them of your invoicing policy and make sure YOU comply.