7 Ways to Get Your Invoices Paid on Time
Managing to get payments on time is often a huge problem for small business owners. Online payment services have blossomed all over the Web to help businesses and consumers exchange money electronically. Thanks to these services, businesses can receive payments from virtually any customer with an email account from around the world.
Research has observed that small businesses lag behind bigger ones in terms of optimizing their e-commerce services. While the same research observed over 90% of these businesses were online, only 20% could accept electronic payment on their website. Online payment services can be used to replace or supplement accepting credit and debit cards.
Online payment gateways charge smaller fees than a traditional merchant accounts. This can have a significant positive impact on small businesses with multiple small transactions becoming that much simpler. From the customer service perspective as well, it is advisable to have multiple payment options available to make sure your client does not turn away for the want of a better medium of payment.
Consumers today are driven not just by discounts, but also by intelligent offers that provide discounts on the products they want. In times like these, timely payment of invoices and multiple payment options for clients is a must-have for all small businesses.
Below are a few ways in which companies can ensure prompt payment of invoices.
Make Invoicing a Priority
For small businesses, a smooth cash flow is crucial. Despite sounding like overly simplistic advice, the sooner you send out an invoice the sooner you will get paid. As soon as work on a project is finished, invoicing it should become your highest priority. Small businesses often allow work to pile up and such things can slip through the cracks. An easy way of managing this is to use one of the many easy, online-invoicing gateways to keep a track of the bills that need to be raised.
Keep a Track of all Your Work
Another issue with small businesses is that one often misses the exact amount of work done on a particular project. Using one of the many project tracking systems online can help you keep a track of the exact amount of hours spent on each project. This will make your invoicing process that much simpler.
Mind Your Manners
Saying please and thank you when communicating with your clients will go a long way in helping you get timely payment of your bills once a project is finished. Research has found that using polite language on invoices raises the payment rate by 5%. Putting the word please before your payment timeline, and thank you at the end could be the difference between a customer who pays on time and one who doesn’t.
Make an Exhaustive Invoice
Your invoice should always include standard information such as billing address, date, contract number, purchase order, tax ID or account number. It would also be a good idea to attach your work order, statement of work, contract or other such document which outlines exactly what you had agreed to provide.
Signing a check adds extra steps to the payment procedure. This subsequently results in a longer gap between the invoice and getting paid. Research has pointed out that electronic payments are made eight days faster than traditional payments. Making it easy for people to pay via an online option will not only speed up the payment time but also increase the number of people paying you within the timeframe.
Set up Reminders
Unfortunately sending a bill is not the end of it. Small business owners often tend to forget to follow up on the bills resulting in delays. Online payment gateways allows user to set up reminders to follow up on outstanding bills.
Create a Specific Payment Timeline
Adding specifics on the invoice adds a sense of urgency and makes sure both parties involved are on the same page. Any late charges on delayed payment also need to be mentioned to the client. Online payment gateways make it simple for you by providing you with easy to fill forms which ensure you are always specific about the deadline for payment and penalties for any delay.
Types of Online Payment
A form of non-cash payment transacted online without any paper check is called online payment. There are basically three forms of online payments to help you get your payments on time:
- One-time customer-to-vendor payment – This form of online payment is most commonly used on e-commerce sites. Once you have filled your shopping cart, you type in your credit card information and click on checkout. Once the site processes your credit card information, it sends you an email notifying you that your payment has been received. Some sites also allow the use of an e-check instead of a credit card.
- Recurring customer-to-vendor payment – This form of transaction is exacted when you pay a bill through a regularly scheduled direct debit from your checking account, or at times of an automatic charge to your credit card. Usually offered by phone companies, car insurance companies and loan management companies, it is used mostly for long-term contracts.
- Automatic bank-to-vendor payment – To utilize this form of payment gateway your bank must offer a service called ‘online bill pay’. For this you have to log on to your bank’s website, enter the vendor’s information and authorize your bank to electronically transfer money from your account. You can choose whether to do this manually for each billing cycle or have the bills paid automatically each month.
Any small business owner can set up an online payment gateway for his company with the least amount of hassle thanks to the many software and applications available online. There are many payment gateways organized according to specific businesses. Do your research to find the best option for you. Payment Card Industry (PCI) compliance is a requirement for all business transacting with debit or credit cards. It ensures that as a business you are equipped to protect yourself as well as your customers against card payment fraud.
Choose the Best Payment Option for You
Many businesses directly choose to sign up with the most popular online payment gateway best suited for their work. With no need to have secure web hosting, a separate gateway system, or a separate shopping cart, some payment gateways make it incredibly easy for payments to be received. It also costs less initially and requires very little work on part of the client. But it is always a good idea, once the business gets going, to add an alternative to the site so as to get the widest reach for your business.
Set up a merchant account for online transaction. Although not all businesses can acquire one, assuming you qualify for one you will need to decide which form of payment you can adopt. Is it just credit card payment through your website, or do you need a recurring payment facility or even an automated phone payment system? Speak to your own bank first to be able to accommodate all of your needs, or to point you in the right direction.
Many banks are also launching phone payment services. There are over 1.5 billion smartphones being used around the world. The Forrester survey has found that 38% of purchases will be made by people from their mobile phones. This number is set to touch 55% by the year 2018. It is becoming more and more convenient for customers to pay online or via their smartphones. For a lot of young customers using an online payment option or using their smartphone to pay has become second nature.
Small businesses need to adapt their payment methods with the tech-savvy world of today. This will help them go a long way in fitting in with their target demographics.