invoice payment terms: top seven tips
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Post on 12-Aug-2015
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- 1. Invoice payment terms to get you paid faster
- 2. If you think invoicing is challenging, it turns out youre not alone!
- 3. Over 1,500 members of an online business forum shared their experiences about invoicing and payments with us.
- 4. and we analyzed over 12 million invoices to discover some revelations about getting paid on time.
- 5. 5 big challenges
- 6. Their number one challenge was getting invoices out on time when they were busy.
- 7. The second headache for business owners was following up on overdue invoices.
- 8. Challenge three was splitting payments across multiple invoices.
- 9. The fourth challenge was being able to invoice quickly and accurately.
- 10. The fth was making sure all completed work is invoiced and most importantly, doesnt go to the bottom of the pile for your customer.
- 11. But invoicing doesnt have to be that way. It can be fast, easy and even fun.
- 12. (or how to get paid faster and have a healthy cashow) Seven invoice payment term tips
- 13. Discuss payment terms before you get started Setting expectations means much less chance of confusion down the track. 1
- 14. Keep detailed records of inventory and time This will save you time when you come to create the invoice as youll be less likely to miss anything. It also means if things are over budget you can let your client know instead of sending them an expensive surprise at the end of the month. 2
- 15. Make the invoice clear and easy to understand List the details of the job in a way that makes sense to the client any confusion could create a payment lag. Its also good to personalize your invoice with your business logo it helps carry on the professionalism of your work. 3
- 16. Set appropriate payment terms If you need to receive payment within 30 days, our data reveals that you will need to set your payment term to 13 days or less. Keep in mind that on average, debtors pay invoices two weeks after the due date. 4
- 17. Address the invoice to the person paying Make sure your invoice goes straight to the person who makes payment to avoid getting lost in someone elses inbox. If youre unsure exactly who that is, give them a call it pays to know the person paying the bills. 5
- 18. Invoice as soon as possible Send your invoice as soon as possible the sooner a client receives an invoice, the sooner they will make payment. It also means they will receive it when the value of your work is still fresh in their mind. Accounting software that lets you create professional recurring invoices will streamline the invoicing process. 6
- 19. Keep on track with debtors The squeaky wheel gets the oil. When things become overdue, send reminders, monthly statements or make a phone call. It will help remind your client that you are serious about getting the invoice paid. Some accounting software sends you an update when the invoice has been opened. 7
- 20. Debtors pay 2 weeks late Get paid in 30 days or less Regardless of whether your payment terms are due immediately or due in 30 days, on average invoices are paid two weeks late. If youre aiming to get paid in thirty days, you should make your payment terms 13 days or less. Should you change your payment terms?
- 21. Average days payment overdue Payment terms in days 0 3024186 30 Elapsed days Payment terms13 Payment terms directly aect when you get paid This graph represents data from over 12 million small business invoices raised globally.
- 22. We know business owners are short on time but its worth taking the time to nail your invoicing process.
- 23. The bottom line: Having a seamless process can drastically reduce the time you spend collecting your hard-earned cash.
- 24. And thats got to be good for business.
- 25. Thanks for reading!
- 26. Heres some more content you might like Want more business essentials and tips? Visit xero.com/guides Why cloud accounting is good for business Read our in-depth guide to learn more about invoice payment terms Mac accounting software thats elegant and intuitive
- 27. Xero is easy-to-use accounting software made for small businesses. We make doing business a pleasure. Learn more on xero.com