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Invoicing Strategies That Get You Paid


You’ve fulfilled the order and sent the invoice; now you can rest easy that you’re going to be paid, right? Not so fast. Unfortunately, sending an invoice doesn’t always immediately equate to money in the bank. In fact a Hubspot survey found that nearly half of small- and medium-sized businesses found it difficult to get paid on time.

And that could be a key reason why 61 percent of small businesses struggle with cash flow, according to another survey by QuickBooks. Another surprising finding? The average small business owner is waiting on an astonishing $53,000 in outstanding receivables. That can set you up for major issues down the line, not to mention the frustration of having to devote extra time to chasing what you’re owed.

The secret to faster cash is in better invoicing strategies. Six invoice strategies can help you get paid faster:

1. A Better Invoice Template Will Alleviate Questions

If you’re sending a standard one-size-fits-all invoice, that could be holding up payment. That’s because your customer’s accounting department might be looking for something specific, and will set aside an invoice that doesn’t include it.

The key to avoid a potential administrative issue is to ask your client exactly what the invoice needs to be processed, such as a specific job code or a detailed list of deliverables.

At minimum your invoice should include:

  • Company name and logo to make it look official
  • Unique invoice number to make it easier to track
  • Date
  • Description of services rendered or products delivered
  • Terms and conditions

2. Establish Clear Payment Terms

Sometimes small businesses aren’t sure what sort of payment terms to use, so they just say “net 30” and leave it at that. But that might not be the best strategy for your company. Here are some common payment terms that might work better for you and should be negotiated in the contract stage.

  • Prepayment: You may require prepayment if there is a risk of last-minute cancellations—for example in the event business where you are setting aside a certain day. Prepayment is also useful if you will be employing subcontractors and want to make sure they are paid.
  • Partial payment upfront: This can be useful if you are working with a new client, and/or if you need some working capital to complete a job, such as if you are a caterer purchasing ingredients. Sending an invoice for half up front—or a quarter due at four defined intervals if it’s a long-term project—can be a smart strategy.
  • Payable upon receipt: Also known as “cash on delivery,” you’ll want to use this strategy if you are delivering goods that you yourself have already paid for. Make clear that you won’t leave the items if the invoice isn’t ready to be paid at delivery.
  • Discounts for early payment (or a penalty for late payment): Often clients are just as happy to pay right away—and you’re delighted to get that cash right away—so giving them a carrot to incent them can be a win-win. The opposite strategy is an increased cost if they pay after your preferred due date; for example, you might tack on 10% if you have to rebill them the following month.

3. Use Software that Automates the Process

If you’re still using Google Docs or Excel to send your invoices, stop right now. There are a number of accounting software packages that can streamline your process and also make it easier to track invoices. Many of them have even extra features that simplify other aspects of running your business; for example, they might process payroll for W-2 and 1099 workers and even help with your tax accounting.

Do some comparison shopping to find software with the features that benefit you, and make sure it has robust training and support available so you can leverage all the bells and whistles.

4. Create a Communication Plan

If your clients aren’t promptly paying invoices, you may need a protocol for staying on their radar. Here are some steps to take:

  • Friendly email reminders: Your invoice may have gotten lost in their inbox, or they had a question that they forgot to ask. Often an email follow-up is all it takes to resolve.
  • Call to see if there’s an issue: It’s easy to lose track of emails, so sometimes a quick call is necessary to find out the reason for the delay. Perhaps your client forgot to give you the correct accounting code which held it up, or the accounting supervisor has been on vacation.
  • Request to talk to the accounting department: Often, your daily contact sends invoices on to accounting and has no idea what happens to them after that. Talking to an accounting team member can clear up any questions they may have had.
  • Be sure to always use a polite, but firm demeanor: When trying to collect payment from clients, always assume that everyone has the best intentions. Typically the matter is easy to clear up once you contact them. However, it is indeed money you are owed, so don’t back down in obtaining sufficient communication about progress.

5. Understand the Ways to Collect Payment

Many small businesses aren’t equipped to accept credit card payments, direct deposits or app-based payments. While these various methods can make your accounting a little more complex, the best way to get paid is the way that your client wants to pay you. That’s why it’s wise to talk to your business banker about how to accept a variety of payment types. Here are some common options:

  • ACH: Also known as automatic transfer, this lets funds travel from your customer’s bank to your bank with no intermediary. Talk to your banker about how you can set this up.
  • Credit card: Credit cards, while convenient for your client, can incur a processing charge on your end. Look into services such as Square or Stripe to find the one that offers the most favorable terms, based on your business profile.
  • Zelle: This app makes it easy for your clients to send money conveniently from their mobile device. It’s easy to set up through the Fifth Third mobile banking app.
  • Check: A check is an easy (and free!) way to accept payment, provided you trust the client who is paying you via check. Of course, you might have to contend with repeated promises that “the check is in the mail,” so be sure to stay on top of reminders.

6. A Protocol on When You Must Stop Future Work or Shipments

Sometimes you just have to put your foot down. If your client is not paying you, then it’s time to let them know you mean business. Give ample notice of your intention and then let them know that you’ll be stopping services.

In most cases, cash flow issues stem from an oversight that is quickly cleared up—getting your cash, and work, flowing again. And getting you back to doing what you do best: providing the best service to your customers.

Need help setting up mobile banking or other business banking services? Contact a Fifth Third business banker today.

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