Unpaid invoices aren’t just an annoyance; they present a real cash flow conundrum. Not only do you wind up investing more time and money chasing down the cash, but your ability to work and cover daily expenses diminishes while you wait. Moreover, the longer an invoice remains unpaid, the likelihood of seeing so much as a dime from it diminishes, so it’s essential to get customers to take care of their bills quickly. If you’re staring at a stack of unpaid invoices, use the methods outlined here to get them paid fast, so you can continue working and growing your business.
1. Review and Revamp Your Policies
Solid invoicing practices reduce the number of bills that go unpaid and diminish delinquencies. For the best results, bill immediately after work is complete and only allow customers a 30-day payment window.
2. Create Penalties and Rewards
Create a late payment policy that tacks on a percentage-based fee or adds a small charge onto subsequent bills to encourage faster payments. You can also offer discounts for those who prepay or pay early. If discounting the total invoice isn’t within your means, consider offering perks for those who are good payers.
3. Use an Invoice Factoring Service
Invoice factoring is the process of selling your invoices to a factor or invoice factoring company. The factor pays you quickly—sometimes in as little as 24 hours—and then collects payments from your customers. Your factoring company may also do things like check into the credit of your customers to ensure they’re able to pay and can help you establish guidelines as to how much credit to extend (how much work to do or goods to sell), so you don’t unintentionally extend more credit than a customer can pay.
4. Keep in Touch
Regular communication keeps your bill on the top of the stack of invoices your customers are paying. A notice upon completion of the work, as due dates approach, when a payment is missed, and as late fees accrue will generate prompter payments.
5. Embrace Digital
Digital invoicing is king. If you aren’t already using a service or special software, look for something that:
- Allows you to generate and update invoices
- Gives you the option to email bills
- Automatically generates updated and repeat invoices based on the cycle of your choosing
- Lets you run reports to identify slow payers, how much money you’re waiting on, and covers historical data that empowers you to make better predictions
- Enables customers to use an online payment portal, so they don’t have to dig out a checkbook and you don’t have to wait or make unnecessary trips to the bank
Get payment from Interstate Capital in as little as 24 hours
Interstate Capital is North America’s leading invoice factoring company. We can get you cash in hand in as little as 24 hours. We also help establish better invoicing policies, identify the credit-worthiness of your customers, and give you 24/7 access to powerful reporting tools, so you can focus on the day-to-day of your business with total confidence that your cash flow issues are solved. Best of all, we don’t operate like business loan companies do, meaning you can qualify for factoring even if you haven’t been in business long or don’t have great credit. Get your free cash flow consultation now.