Waiting for due payment is an uncomfortable process. If you have not automated your overdue invoice handling process, you may waste a lot of time chasing late payments. Your payments need to be on time to improve your business cash flow which is very crucial for a healthy business. A healthy business is able to generate more revenue.

6 tips to improve invoicing process.

Prevent Overdue Invoice

If your invoices don’t have a due date. Your clients and suppliers may not be clearing their dues on time. Therefore you need to set due date on your invoices in a clearly visible location like the top right corner. Below are 3 more things to take care of.

1.      Client Check

Having the right customer can improve your chances of getting paid on time. Make sure your client is a reputable and well-run business. You can also ask for an advance deposit from a new client. This way you will be able to understand how they handle payments and if they are serious about doing business with you. It is important that everything is properly documented and if your invoicing software supports recent history tracing and tracking then you can also use that feature to avoid any confusions at laterstage.

2.      Discuss Terms

Your terms of payments such as payment method, due date, consequences of late payment and more. It is important to explain and discuss your payment terms and policies to your clients and suppliers before making a deal.

Discussing your terms with your client will make sure they are not surprised at the time of invoicing. And this will also help you to get paid on time. Your client will also appreciate the transparency from your side and this helps in building a strong relationship for the future.

3.      Penalties

If you’re still facing late payment issues then you can also setup late payment charges. Businesses commonly charge 5% fee on late payments, you can set it as a percentage or set an increase of x amount for every x days after the due date. A late payment penalty is enough motivation for people to pay on time.

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How to Retrieve Overdue Payment

Invoice overdue notice is usually sent a day after deadline is crossed. It can be sent again if the payment is still pending, usually after 30 days. Tuesdays have the highest email open rate, and best time to contact a business is between 9am and 2pm.

How to Follow Up

By Email

The subject should convey importance and create a sense of urgency. As for the body, you can write a simple message. Do include “Please” and “Thank you” in the message. Your tone should be more direct and strict as weeks pass. Wait for a response and deal your client’s issue with care. If they have trouble clearing your invoice, offer partial payment options.

Example 1:

Subject:

Important, [Company Name] Invoice# [Number]

Body:

Hey [Name],

I’m following up on invoice# [Number] which was due yesterday. We thought we’d give you a heads up in case you forgot or you didn’t receive it before. I’ve attached it again here. Please clear the invoice by [Date] to avoid [Late charges / Service cancelation].

Could you please confirm if the invoice has been scheduledfor payment?

Thank you.

[Sign]

Example 2:

Subject:

Final Reminder, [Company Name] Invoice# [Number]

Body:

Hi [name],

Your Invoice# [Number] was due for payment on [Date] and is still unpaid.

You have not been responding to our previous reminders. I’m afraid we will shortly begin legal proceedings in order to receive the amount.

Thanks,

[Sign]

By Call

If you’re not getting any response by emails, you can also try calling the business contact person or accounts department and share that their invoice has been overdue. Ask them if they received your previous emails and to clear the invoice early to avoid inconveniences. A call is usually enough to get people to pay you.

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