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When you send an invoice to a customer, you expect to get paid soon after they receive the invoice. But as any service provider will tell you, that is rarely the case. FreshBooks’ data reports on average 1 in 4 self-employed people are owed as much as $2,000 by late paying clients.
So, how do you get your customers to pay your invoice faster? According to FreshBooks , it can be as easy as following the 7 tips the company has created. And considering its data research team analyzed 10,000 invoices to come up with the checklist, it is worth looking at.
According to FreshBooks, 91% of freelancers using the checklist said they got paid in full. For freelancers, invoicing is an important part of their workflow, so crafting a solid invoice is essential. It also applies for the many small business and self-employed professional who send hundreds of invoices every year.
Getting Paid on Time
The reason FreshBooks sifted through 10,000 invoices was because many self-employed professionals had overdue invoices. Forty percent of these professionals have at least one overdue invoice with an average of $2,500.
If you have more than one overdue invoice, you can see how it can quickly create problems for your business. This inevitably results in cash flow complications. The issue of cash flow is a constant problem for small business owners and freelancers. And not getting paid on time is one of the biggest causes.
For some reason, some industries pay faster than others. In the FreshBooks data, IT and trade professionals get paid on average every 16 days. It goes up to 20 days for the legal industry and 21 days for creatives.
The 7 Tips
- Don’t send the invoice at the end of the month. FreshBooks says sending an invoice on the 30th and 31st takes up to 20% longer to get paid.
- Limit line items to 2-5. According to the data, this is the sweet spot. The only time you should include more is when your client requests a detailed breakdown of your work.
- Keep the total low by breaking them down into multiple small invoices. In the analysis of the data, invoices lower than $1,660 are paid 11 days sooner.
- When you send an invoice make your terms as clear as possible. Make sure to indicate how you want the client to pay with accurate and concise language. The research says 94% of the invoices which mention “late fees” are paid.
- You might not think being courteous in your invoice helps, but the data says otherwise. Invoices with “please” and “thank you” get paid on average two days faster than those that don’t.
- Give your client multiple payment options including online payments. When an online payment is an option, invoices get paid seven days faster.
- Start using automation to remind your clients of missed due dates. This not only ensures they will be reminded, but it is also one less thing you have to do.
This checklist is based on a lot of data. While it will not guarantee the person receiving the invoice will pay promptly and in full, it will improve your chances.
Once you have a solid invoicing workflow, create a template so you can use it all the time. Invoicing should not be another job for you.