The most difficult part of the business is not providing goods or services, it is following up with clients and customers consistently with regard to unpaid dues. Small businesses are commonly affected by the non-payment of invoices since it causes problems with their cash flow and working capital.
It is always important to ensure that there is a contract in place between you and the client. This helps in the quick resolution of any potential problems that crop up. The contract terms should be clear and legally binding, containing all the important details of the transaction.
The terms of payment, the modes of payment, deadlines, the applicability of late charges, and all other essentials must be covered in the contract.
Sometimes, the service provider requests a part of the fee to be paid at the beginning of the project. It also serves as an indication of good faith and, in a way, guarantees that you are likely to receive the rest of the payment at the end of the project.
Offering multiple payment modes only increases your chances of getting paid on time. With the introduction of UPI based payments, there are a host of apps available today.
By offering flexibility in payment modes, you are increasing your chances of getting paid on time.
Automating the invoicing process through the use of accounting software helps speed up the process of invoicing and receiving your dues.
Accounting and invoicing software such as ClearOne backup your data safely on the cloud using SSL encryption. The cloud-based features allow you to create, edit and send invoices on the go.
Clients respond to professionalism. The language used in the invoice has to be clear, concise and polite.
In a case of an ongoing engagement with a client on a long-term basis, offer the client the option of a retainer. This allows the client to adjust their budget according to the monthly payments towards your services.
The best time to invoice a client is immediately on the completion of the project. Adding all the key details to the invoice will enhance the early receipt of your dues.
If the contract terms specify a certain date for invoicing, say the 7th of every month, you must promptly send the invoices to the client on the specified date.
Phrases of gratitude such as “Thank you for availing our services” tend to leave a positive impact on the client’s mind. This also helps build a meaningful and long-lasting relationship with the clients.
Regular communication is always beneficial to client relationships. Often, when payments are overdue, the habit of maintaining constant communication can prove to be very helpful.
In an event where invoices have remained unpaid, the healthy relationship between your client and you could provide a solution without causing any real damage to the relationship itself.
Tracking and reviewing invoices and account receivables every week helps you stay on top of invoices that are due. This helps you develop a necessary plan of action towards recovering the dues.
Proactive steps should be taken towards recovery by sending the clients friendly reminders about upcoming payments. This is a gesture that is well appreciated by the clients as well.
By offering the client a discount on early payment, you are increasing your chances of receiving timely payments since clients are always looking for an opportunity to reduce their overall costs.
Care must be taken to see that the number of outstanding invoices does not pile up before the recovery becomes an uphill task.
The client may regularly delay payments and offer up excuses for the same. Offering a grace period is acceptable only if the reason for the delay is genuine.
There is nothing wrong with inquiring about payments due to you, provided you are courteous and polite. Standardising the process of enquiry of dues helps save time and effort.
While offering discounts for early payment, it is always a good idea to insert late fees into the contract if the payment exceeds a certain number of days. This will speed up the payments from the client’s end.
Where the delay is unavoidable, especially for clients that have otherwise paid on time, consider revising the payment schedule to suit their needs.
Sending the clients the occasional gesture of appreciation is a good business practice. This tells them how much you value them and their business.