How to speed up payments: 13 tips to get clients to pay their bills and invoices faster

The challenging part of doing business is to follow up with customers for any unpaid invoices. Small businesses running with unpaid invoices affect their survival in the long run. Hence, the organization must establish a proper mechanism to tackle overdue invoices. Further, one can send friendly reminders to the customers for the overdue invoices. It can also aid in reducing the damage to a greater extent.

1. Requesting for a deposit

Requiring a certain percentage of the invoice value in advance for any long-term assignments or contracts should be sensible. It safeguards the vendor against any instances of non-payment. It also ensures that some of the assignment’s costs are offset against the collected amount. The deposit receipt further ensures that the business can keep a stable cash flow to meet uncertain business expenses.

2. Creation of professional invoices

The design format of the invoice raised must be professional and straightforward. All the invoice’s particulars essential to expedite the payments have to be included in the bill. For example, information such as the bank account number, branch and the IFSC Code has to be compulsorily part of the invoice to ensure the payments are received sooner. Use modern invoicing software that supports automatic payment collection with various professional templates for selection.

The best online invoice software provides automated reminders, two-way review and approval capabilities, and cloud-based solutions.

3. Raise invoices without any delays

The earlier you raise the invoice on the customer, the higher your chances of getting paid within the invoice due date. Once the contract is nearing completion, ensure that the invoice is issued to the customer. It helps because the customer can easily recall the contract details and push them to release the payment sooner.

4. Establish clear terms of payment 

Both parties must decide the payment terms in advance. It helps avoid any confusion any time later. Be clear to the customer that there shall be a levy of penalties for any delays in the payment beyond fixed invoice due dates. It ensures that those terms are implemented as per the contract. Mentioning complete information for the payment also aids in building a better rapport with the customer. 

5. Provide more options for payment modes

All customers appreciate flexibility in the payment terms. It also supports the seller and provides them with better chances of getting the payments on time. If the goods or services are regularly supplied to the customer, it is advisable to chat with them and know their preferred or convenient payment modes. After deciding this, one may also go for the recurring billing option, where the payments are automated for a specific date during a month. It ensures timely payments to the vendor. 

6. Provide incentives for early payment

It works well for the organization where they make the customer feel privileged. If a customer pays early, providing them incentives and discounts would help in building a healthy relationship for the future with them. Further, to claim the discount offered, they must ensure that the invoices are paid on time every month, reducing the seller’s burden.

7. Carry out regular follow-ups

The follow-up timing is crucial to get the invoice dues from the customer. If it is a fresh customer, it makes sense to provide them more time to settle their invoice dues. However, if the customer is a regular defaulter, follow up every day or two. Follow-ups often have to be done once every fortnight (15 days) to promptly remind customers of the outstanding invoice dues.

The seller can send the overdue invoice letter to the customer over weekends. It is then that the customers usually go through any letters and their inboxes.

8. Send overdue invoice letter with all details

The overdue invoice letter must consist of all the essential details that aid the customer to make the payment faster and more efficiently. They contain the following listed-

  • Date of issuing the invoice and invoice due date
  • Invoice serial number that must be unique
  • The total invoice amount due
  • Payment conditions and details
  • Address and contact details
  • List of reminder letters previously sent 
  • If any late fees apply, then mention the same with the breakup

9. Use precise language and bear a professional tone

The overdue invoice communication sent to the customer covering multiple periods may require different tones. However, the communication spirit must be of a clear, precise, and concise tone and language to always sound professional.

For instance, the following cases let us know how to word the letter when overdue are of different periods-

For invoices that are due by 1 to 15 days-

We are giving a gentle reminder for you to settle the invoice dues for an amount of ‘xx’ on or before ‘dd/mm/yy along with interest for the delayed payment of ‘xx’, failing which you may need to pay more interest.

For invoices that are due by 30 to 60 days-

The tone must be rigid rather than friendly. One must convey that the settlement of a particular unpaid invoice has been delayed, creating a lot of inconvenience to the seller.

For invoices that are due by more than 90 days-

The time has come for approaching the invoice collection agency. They will take over because three months is considered a long period to wait on collecting invoice dues. If it is left unpaid for more than 90 days, it will mostly become a bad debt unless reasonable steps are taken to ensure it does not turn into bad debt.

10. Levy late fees and penalties

At the beginning of the project or contract, the situations for levying late fees must be discussed with the customer. It ensures that the other party is not surprised by it later. The late fee levy also has to be decided in advance. Every regional state has its threshold limits about levying a maximum late fee.

But since the levy of late fees may be a sensitive topic, this option must be adopted sparingly and only when necessary.

11. Provide payment plans

The organisation’s invoice overdue letter can also consist of a payment tracker suitable to the customer’s interest and yours. The invoice dues can be paid in bits as installments over regular intervals, ensuring better and steady invoice collection.