The Fundamentals Of Better Follow-Up Invoicing
It might not be as easy a task collecting payments from clients as it seems. Yes, you would definitely prefer sending an invoice for everything you owe and getting paid by the due date, but understanding and using the right invoicing tools is key.
Certainly, in an ideal world, all customers would pay promptly and conveniently. But they don't always do so. And among the reasons why people or organizations don't pay invoices is because of poor follow-up.
Another thing to take note of is that one notice is not enough. Even well-meaning individuals can misplace paper or email solicitations. Streamlining how you handle invoicing at your company requires lessening headaches for all parties involved – This can best be achieved through implementation of an invoicing follow-up process which will reduce late payments and minimize manual effort.
Review Your Existing Invoicing System
If you want to better your business’ invoicing procedures; understand what it does currently and how well those methods work.
Anyway, just make sure you know exactly what's happening with them before making any decisions about what needs altering – Furthermore, if possible try analyzing relevant pieces of data which could help come up with effective amendments to suit your organization’s invoicing system best; Current performance indicators like Days Sales Outstanding (DSO) and Collections Effectiveness Index (CEI) can provide valuable insights into the impactivity levels realized by your current invoice generation strategy.
Map Out An Invoice Follow-Up Plan
Once there is a general idea within your company about ongoing practices related to invoicing; including when they should happen (frequency), who should do them (roles) as well as how they should be done (methods), think about when different notices need to occur in relation with each other along a timeline.
For example:
- Initial send of invoice (date variable)
- Update 7 days before due date
- Update on due date
- Update 7 days after due date
- Update 14 days after due date
Adopt Automatic Receipt Tools
Once you have a better system in place for invoicing follow-up at your business, the next struggle is remembering to use it.
Luckily there are plenty of online invoicing platforms that offer automatic receipt chasing. With these systems you can set up a series of custom notices to go out on specific dates. Simply input email information and time periods, and let the software take care of the rest.
Your company doesn’t care too much about invoicing follow-ups until clients stop paying their bills. But with some thoughtful preparation and strategic planning, your business can avoid wasting valuable resources on ineffective strategies for collecting late payments.
