The financial year is coming to an end and now’s the time to chase up those unpaid invoices so that your bookkeeping isn’t a headache come tax season. Australian payment times have been identified as among some of the worst in the world, with invoices paid on average 27 days late.
To avoid late payment this EOFY, here are our tips for managing your invoicing process to maximise your chances of getting paid on time.
Include your payment terms up-front
All good business relationships are built on clear communication. When you’re engaging a new client for the first time, ensure that you let them know exactly when payment will be expected. It’s always a good idea to communicate due dates for payment in writing via email, and then again in estimates, quotes — and finally in the invoice itself.
If you have a paper trail of your payment terms it makes it much easier to chase clients in the event of a late payment.
Send an estimate
A common reason for late payment for invoices is disputes over the invoiced amount. By providing an estimate in advance you ensure there are no surprises when the invoice lands in the clients inbox. Square Invoices allows you to send digital estimates via email that your client can then approve, allowing you to quickly convert that approval into an invoice.
Send invoices promptly
Getting into a good routine with invoices is important when it comes to making sure you get paid. Make sure you’re consistent with your timelines when you send the invoice to your clients so they get familiar with when you expect payment. That might be on delivery for physical products, or even ahead of time if you’re providing a service.
If you end up sending the invoice weeks after a project has been delivered then it can look unprofessional and you’ll find yourself spending time chasing payment.
Make it easy for your customers to pay
Running a business is hard work, but you already knew that. It’s more than likely that your clients also have a lot on their plate, so making it as easy as possible for them to pay is key. Consider a platform like Square Invoices that allows you to email the invoice directly to the client so they can pay quickly via card.
Our data shows that 48% of invoices processed through Square in Australia are paid within one day, with all invoices, on average, paid within 6 days.
Setup automatic reminders
Chasing invoices can be a big hassle — and it takes up time that you could otherwise be spending on managing other aspects of your business. Look for an invoicing tool that allows you to send automatic reminders in the run-up to the due date.
More often than not your customers will have just forgotten to pay, so sending a well timed nudge is a great way to get that payment across the line.