Getting paid on time is a problem all field service companies face, and the longer it takes, the more your business will suffer. However, you can take steps to get clients to pay their bills on time. Here are some reasons why clients pay invoices late and what you can do to change this.
Your payment terms are too long
If your payment terms are too long, your customers will pay other bills first and pay you last. Some clients may wait until the last day to make payment, holding onto their money for as long as possible. Long payment terms will leave you cash strapped, making it difficult or impossible for you to pay your company’s debts.
They’re waiting for a copy of the invoice
It can be embarrassing to wait for a client to pay you when your admin team hasn’t sent the invoice. It also delays payment, as your customer could have paid you earlier. If you’re still sending paper invoices, there’s a good chance your customer may never have received the invoice, or they may have lost it. With a paper-based invoice system, you can’t track the documents and confirm that clients have received their invoices.
They forgot to pay you
Some clients are genuinely disorganised and may forget to pay you or believe they have already paid you. Because you rely on customer payments to keep your business in the black, you must remind them to pay you, no matter how forgetful they may be. Some clients expect you to follow up with them until they pay you. For others, your invoice may not be a priority for them. Customers may also forget to pay you if you offer limited payment methods and it’s time-consuming or a hassle to pay you.
They can’t afford to pay you
Rising costs have left many businesses and people unable to pay their bills. Some are going out of business and can’t afford to pay you or any of their creditors. While this is beyond their control, it, unfortunately, affects your cash flow.
4 ways to get customers to pay invoices
Now that we’ve identified why customers pay invoices late, we can discuss the ways you can encourage them to pay you on time.
Send invoices on time
The sooner you send invoices, the quicker you’ll get paid. The best way to ensure all invoices are sent on time is to streamline the process with Invoice Management Software. Once a worker has completed a job, they can immediately convert the job sheet into an invoice and email it to the client. A copy of the invoice will be stored on the cloud-based system, and if your client says they didn’t receive the invoice, you can check the system to confirm that it was sent.
Follow up on outstanding payments
If clients don’t pay you on time, you need to follow up with them to find out why they haven’t paid you and remind them to pay their bills. However, when you have multiple outstanding invoices to follow up on, it can be time-consuming. Fortunately, you can send automated email reminders with Invoice Management Software. Automating email reminders saves you time and eliminates the inconvenience of individually emailing each client.
Make payments easier for your customers
If you offer simple payment methods, it won’t be a hassle for clients to pay invoices, encouraging them to pay you faster. You could use an invoice system with an embedded payment solution so you can accept secure payments online, on the phone or in person. For example, you could send your clients a secure, encrypted email link to accept card payments. An embedded payment solution such as ClearAccept reduces the steps customers must take to make payments, making it simple and efficient.
Offer incentives for early payments
You could encourage your clients to pay you early and save money by incentivising early payments. For example, you could offer a 5% discount to clients who pay you before their invoice is due, or you could offer them a free service. You could also introduce a late fee to deter late payments. For a late fee to be effective, make sure your clients are aware of the policy and that it’s included in the terms and conditions on your invoices. If your customers can’t afford to pay you the full amount owed, offer a payment plan to ensure you get paid.