Is Your Billing Process Delaying Payments?
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Apparently, the check isn't in the mail for many U.S. businesses. The National Federation of Independent Business (NFIB) found that 40 percent of small-business owners reported up to one-third of their receivables more than 60 days delinquent.
Part of the problem is the invoices themselves, says Christian Lanng, co-founder and CEO of Tradeshift, a Denmark-based online business network that offers free invoicing tools. Often payment gets delayed because of incorrect or missing details, company information or other mistakes, he says, adding, "Format matters. Make invoices clear and professional. They should be easy to read and uniform."
Eliminate invoice-driven delays by following these tips:
• Fill in the blanks. Make sure your invoice template includes completed fields for information required by your clients, such as date, purchase order number, account number, description and Tax ID number, Lanng says.
• Invoice immediately. Sometimes the lag between completing an order and generating an invoice can add a week or two to your collection time. "You need to treat the invoicing process as seriously as you treat your business overall, not just as a back-office function," says Flint Lane, CEO and founder of Billtrust, a Jamesburg, N.J.-based billing company.
Related Video: How Can I Protect Against Late Payers?
• Consider online invoicing. Lane says using an online billing platform from Intuit, Billtrust, Tradeshift and the like reduces the cost and time associated with traditional invoicing. In fact, the cost of generating a single paper invoice is approximately $11 in materials, postage and time spent, according to Tradeshift, which estimates a reduction in the cycle time (from when an invoice gets generated to when it gets delivered) from eight days for traditional invoicing to three days for online invoicing.
• Use your invoice as a promotional tool. Lane advises his clients to use the invoice as a tool to promote other products and services they offer. "If you're invoicing for bottled water and also sell coffee and snacks, put a big message about a special on coffee or a coupon in there," he says. "You're just promoting other products and services you have."