Significantly overdue invoices are a problem in many industries. There are several things you can do to increase the likeliness of getting paid promptly for the products you sell. Every one of these can have an impact on your organization’s cash flow. When you combine all of these steps, you increase your chances of getting paid considerably.
What to do before the saleThe information you gather before the sale will allow you to follow up if you don’t receive prompt payment. It will also ensure that others can take over on your behalf if your own efforts don’t succeed. First and foremost, it is essential that you obtain complete and accurate contact information from your client. The information you gather before the sale should — at a minimum — include, the full name, address and phone number (home or business) of the person who is responsible for paying you. Additional contact information, such as a cell phone number and place of employment are helpful as well.
A contractThe more expensive the product or service you sell, the more important it is to have legal protection. Having a contract also increases your chance of getting paid. This should include what products or services you will provide, payment terms and anything else you need to cover. If you currently use a contract and have had an issue with getting paid nevertheless, you may want to have a lawyer update your contract language.
Delivering exactly what was promised in a timely mannerIt is essential to keep up your part of the sale. This includes prompt delivery of exactly what you promised to the right location at right time. If you sold a “midnight blue” widget and a “royal blue” one arrives or the right color arrives a day late, your customer won’t be happy.
Prompt invoicingSend your invoice promptly if the customer doesn’t pay on the spot by credit card or check. Invoices should go out the same day or the same week, if possible.
Information to include in your invoiceEnsure that the invoice includes relevant details to the transaction, including but not limited to:
- Your complete contact information including phone number so the customer can contact you with questions
- Your mailing address (e.g. a post office box) if different from your office address
- Your customer’s complete contact information
- A description of goods and services provided including quantities and any other relevant information as applicable (SKU #, color, full description, batch number, color, ship date, taxes, …)
- List items separately with their individual descriptions and pricing if one invoice covers multiple line items
- Date when goods and services provided
- Due date and payment terms
- Invoice number
- Customer ID number if you use one
- Any instructions needed (e.g. where to send the payment, whom to make a check payable to, if payment via a website portal is an option, …)
- Put the word “Invoice” both on the invoice and the envelope. If you submit your invoice by email, put “Invoice” in the subject line. You can add a due date here as well.
Beyond the invoice
- Keep track of any email or text correspondence you have during and after the sales process. Yes, even text messages can be useful.
- Friendly phone call reminders help as well. The emphasis being on “friendly”. People are more inclined to pay their bills if they are treated with respect.