How many times have customers not paid your invoices by the due date? Many times? And how many times have you felt angry and frustrated about it? Probably many times too. The good news is that there is one simple little thing you can do to double the chance of your invoices being paid on time.
A recent survey of small business owners by TermSync reported that…
“49% cited invalid or missing purchase order information on invoices as a reason that their customers did not pay their bills…”.
The reason why nearly half of all invoices don’t get paid is because there’s an error on them.
When I first started my business, customers often didn’t pay our invoices on time. At first, I took it a bit personally. After all, we’d done the work.
But when I looked a bit more closely, I started to see why:
4 Reasons why 49% of invoices are unpaid
- The invoice had gone to the wrong person or department
- The customer’s PO number was omitted
- Our terms of trade weren’t clearly visible on the invoice or
- There were mistakes in the calculations.
We were making a whole variety of little, but important mistakes. No wonder customers weren’t paying.
Like all small business owners, cash flow was critical for me – we needed our money to be able to pay staff and suppliers. So I devised a simple invoice template and checklist to make sure we sent out 100% correct invoices. It made a huge difference.
After that customers paid us on time. Cashflow was strong, I never had to ask the bank for a loan or put more money into the business. It was completely self-funded for 15 years.
Here’s the simple invoice checklist I devised to create the perfect invoice that gets paid on time:
Perfect invoices: 2 x more likely to get paid on time
- Send it to exactly the right person at exactly the right address (call to check if you aren’t 100% sure).
- Include everything your customer needs e.g. PO number (check if you aren’t 100% sure).
- Double check the agreed price charged.
- Double check all calculations.
- Display your trading terms so they can’t be missed.
- Include the date your customer needs to pay the invoice.
- Include the name of a contact in your company (in case of a query).
- Prominently display ALL payment methods and details so payment can reach you fast.
Calling customers to check we had the right invoicing details, before we prepared the invoice, had a hidden bonus.
We found that customers liked the fact we were confirming the details. They thought it was great customer service. And of course, our invoices didn’t get lost and didn’t have errors so customers could pay on time – and they did.
We started to win ‘Industry Best Practice’ awards, because of our great service, and we started to get repeat business and referrals. And all because we just wanted to get our money in on time.
Make a few simple checks and tweaks to make sure your invoices are 100% correct before you send them. It’ll pay you back 10-fold too!
What’s the #1 challenge you have getting your invoices paid on time? Leave a note below and I’ll do my best to find a solution for you.
To your business success!