While the process of gathering payments from clients seems to be an easy and direct interaction, it isn’t always. As you’d likely prefer to submit a receipt with everything you’re owed, and have your client send back the payment by the due date, understanding and using the appropriate tools for invoicing is imperative.
In an ideal world, indeed, clients would all make installments in a convenient and fast way. Unfortunately, they don't always pay on schedule. Among the many reasons individuals and organizations don't pay invoices, is the lack of legitimate follow-ups.
It’s also important to note that one notice isn't sufficient. Paper and email solicitations can get lost, even by individuals with good intentions. In improving how your company manages invoicing, removing hassle is essential. This can be most effectively implemented through the use of an invoicing follow-up procedure that will lessen late payments and limit manual exertion.
Evaluate Your Current Invoicing Plan
When looking to improve your company’s invoicing procedures, it’s pivotal to understand it’s current practices, and the results derived from it.
Whatever the case, ensure you know precisely what's going on with such operations prior to making any choices about what to change. What's more, the analysis of important pieces of data, if possible, can assist in the formulation of effective adjustments to your company’s invoicing plan. Access to metrics such as Days Sales Outstanding (DSO) and Collections Effectiveness Index (CEI) can be extremely helpful in interpreting the current outcomes of your invoicing efforts.
Plot Out an Invoice Follow-Up Plan
Once your business has a general idea and approach for ongoing invoicing practices, and how they are to be conducted, there should be a consideration of the timeline of such notices.
Here's an example plan:
- Initial send of invoice (date variable
- Update 7 days before the due date
- Update on the due date
- Update 7 days after due date
- Update 14 days after due date
Use an Automatic Receipt Tool
Once you've assembled an improved and analyzed system for your company’s invoicing follow-up interactions, the challenge of remembering to employ them surfaces.
Luckily, there are many online invoicing platforms that offer automatic receipt chasing. These tools permit you to arrange and set a progression of custom notices to send on explicit dates. Simply set the time periods and enter email information, and the invoicing platform will manage and deal with the cycle for you.
Focusing on invoicing follow-ups doesn’t pose much of a significance to your company, until clients stop following through on their bills. Some cautious preparation and planning can assist your business in abstaining from having to spend valuable assets on ineffective methods of trying to collect late payments.