A late invoice can be an explorer of chaos for a business. From chasing up customers for payments to managing calls from suppliers, managing the cash-flow is the biggest challenge for businesses. Cash-flow is the lifeline of every business and late invoices can make it tricky to manage.
However, the first step is to understand why this happens and why companies experience late invoices. The reasons may vary from customer payment terms, slow invoice sorting within the company, seasonal purchase-sell cycles, or challenging economic times. Therefore, businesses should be prepared to face delays in payments and adopt techniques to handle such situations amicably. In this article, we’ll be sharing five tips to deal with late invoices. Let’s dive in.
Tips to follow:
1. Create a System and Process:
The first step to effectively managing late invoices is to create an organized process. This process should include invoice submission, printing, sorting, and more. It should also include details like the payment terms between customers and suppliers.
If you find that expenses are piling up due to late payments, create a system to track the due amount. Doing this will help you better manage your accounts and remember the pending dues. Additionally, set up an automatic system to send notifications to those showing a delay in payments. You can use Invoice Office and make the process streamlined.
2. Know Your Payment Terms:
Another way to effectively manage late invoices is to know your payment terms. Many vendors have different payment terms, varying from one customer to the other. Knowing these terms can give you an idea of the time taken by customers to pay their dues on time.
Also, set specific terms for each payment and use other methods to ensure those terms are mentioned. Use emails, phone calls, text messages, and more to communicate with customers about their payment terms. If someone fails to pay the amount, then remind them about the due amounts via mailers or texts.
3. Offer Early Payment Discounts:
If you’re facing trouble collecting payments from customers, consider offering them an incentive. A few discounts or payment terms can help you get paid on time. If you think it isn’t feasible, discuss the same with the customer and arrive at a suitable solution together.
For example, you can provide discounts or offer flexible payment terms such as a deferred payment plan. Making the process simpler and hassle-free encourages customers to pay early. Emphasize the value of their payment and request immediate payment in return.
4. Update Your Accounting Software:
Another way to efficiently manage invoices is to keep your accounting software updated. Ensure your system validates payment terms and payment dates, and likewise updates your payment status. Additionally, set up automatic emails to alert you about the due payments on a certain date.
This is especially beneficial if you have hundreds of customers and contracts in place. It will help you track payments, set reminders, and calculate fees faster and more accurately. Moreover, you can easily manage multiple accounts, know the status of invoices, and identify late payments.
5. Make Use of Electronic Payments:
Last but not least, an efficient way to manage late invoices is to make payments electronically. Electronic payment solutions help you keep an organized record of your payments, allowing easy invoice tracking. The bonus is that payments are made on time and offer an extra layer of security.
With electronic payments, customers don’t need to track their transactions manually. You also get the flexibility to automatically deduct payment from the customer’s account every month. While it takes effort to set up a payment system, it is worthwhile in the long run.
Final Thoughts:
Late invoices can cause a lot of headaches if not handled properly. However, with the right system, you can easily ensure timely payments from customers. We recommend following the tips mentioned above to help you manage late invoices efficiently and get paid faster. But be sure to use the right invoicing software so that all your business payments need to get catered!
