When running your own business, you must know that a business will not succeed if you do not get revenue for the services/products sold. Similarly, as with accounting and bookkeeping (learn more here). Well, late payments are very disruptive to cash flow and reduce business productivity. But the problem of late payments sometimes is not always the client’s fault. It could be that late payments are due to your own mistakes in the billing process. Below we will discuss what mistakes should be avoided so that payments can be received by the company on time.
– mess up the invoice
This one seems clear, right? But small mistakes are often the number one reason why your invoices haven’t been paid. Be careful in correcting each invoice to make sure it’s correct. If you forget to change the old invoice number, for example, your client will likely enter it into their payment system and get a message that the payment has been paid. Your invoice must include a unique invoice number, accurate data, and a detailed account of what is being billed. You must also ensure that you have set invoice payment terms that are useful for the company’s cash flow and also fair for your customers or clients.
– Expect Immediate Payment
Did you pay the bill on the day you got it? Most businesses don’t. Most business clients will pay their bills by the due date. If this project is very large and requires high costs, it could be that the payment will be longer because the invoice may require several layers of approval before it can be processed.
Because of this, when you build a company budget, include leeway for invoicing payments that are out of order. Finally, make sure to include the due date on your invoice in addition to the requirements that must be met by the client regarding payment.
– Forgot to Send Invoices Regularly
In the early days of running a business, it looks like you will never forget to make an invoice. But as your business grows, sending out invoices can sometimes be a problem because there are too many things to deal with. When you send the final part of the project, you must also send an invoice. If you are working on a long-term project with a billing period, you must ensure that you have sent an invoice promptly.
If you delay sending invoices, you run the risk of confusing clients about billing and ignoring invoices or assuming they have been paid, and you send them in error. Using an accounting system that provides online invoicing, can help you avoid these expensive mistakes
– Not Making Invoices According to the Agreement
This usually happens when we handle long-term projects where sometimes the price of the goods we provide can increase or decrease according to market conditions, so it no longer matches the value of the price agreed at the beginning of the purchase contract. To avoid any misunderstanding from the client which results in reporting to the relevant legal parties, as well as the possibility of unpaid bills, it is better for the company to always inform clients about price changes.
During the project process, you must be very clear about how to work improvements or cost increases can occur. Be sure to inform the client both verbally and in writing, with updates to the contract or statement of work as needed. Ending in a long dispute over fees with clients is a surefire way to guarantee that your invoice payment will be late.
When you manage a business, you will have clients who may come from friends or family. This is certainly beneficial if you can run it professionally, especially when you have to send bills and receive payments.
You must always remember that they are clients before friends. Send bills on time, provide clear payment limits and establish the same payment system as your other clients. Maintaining professional relationships will keep expectations in line and help you get paid faster.
The five tips above may be just the beginning, if you avoid this mistake, you will have a better business relationship and make your invoice paid faster. Always remember that being a business owner means acting like another professional business owner.