It is hard to accept that you run a business and haven’t faced the issue of late payment. It has become a norm and businesses of all kinds are grappling hard to deal with it. As a business, it is not easy to send invoices and get paid online on the first attempt. There are many caveats and hurdles.
The immediate consequence of late payments is no cash flow. When tons of invoices are pending, the curve of cash-flow exhibits a negative growth which is a matter of concern. The implementation of automatic invoicing software has managed to curb this issue up to/great extent.
If you are also facing a tough time in getting paid on time and want to know how an online invoicing software can make life easy, read this post. First, we will talk about some of the key facts related to late invoices and then will provide expert insights to deal with them.
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Late Invoice Payments – What the Number Says?
- On average, there are more than 300,000 individual invoices across 80 countries. Out of these, 60% of the invoices are paid late.
- It takes nearly 6 days to get paid. For small businesses, the period of invoice payment is 4.3 days.
- Around 1/5 part of the total generated invoices get delayed as much as for two weeks.
- Japan is the only country where invoices are paid on time. Here, invoices are paid around six days before the last date.
- South Africa, Mexico, and Australia have the worst track record when invoice payment is concerned. Here, invoices can be as delayed as 26 days.
- 25% of invoices are paid late in the UK.
- Around 15% of total invoices are taking more than 60 days for payment.
- Nearly, 43% of SMEs faced the issue of late payments in 2018. The loss incurred due to this is £13 billion.
- 28% of businesses that are receiving the payment late have to cut down the salaries in order to maintain the cash flow.
- The average reporting time for invoices is 38.97 days.
The ways to Deal with Late Invoices
Seeing all this data, one thing is that the late payment issues are deep-rooted and have affected a majority of businesses. It is hard to disregard this aspect. However, one has to find ways to deal with it as an increased number of pending invoices will lead to cash deficiency in an organization.
Here are some viable ways to deal with late payments:
Start using an online invoicing software
Trailing pending invoices and ensuring timely payment is a tedious job. The use of automatic invoicing software is the most viable way to accomplish this task. Using this tool, one can track the progress of invoices at multiple stages.
Any pointed-out delay will be notified to the customers automatically as it can send reminders. Recurring reminders can be set for ensuring nothing goes missing. The monthly sales reports will be automatically generated timely.
When reports are formed on time, spotting late payments will be done on time, and immediate actions can be taken. All of these things will have a positive impact and a business will be able to bring down the high number of late payments.
Follow the payments rigorously
If you want to reduce the incidents of late payment, adhere to a proactive approach. Try to follow the payment progress without fail and don’t hesitate to remind the clients. But, more than following, following at the right time is important.
Within 15 days, try to send a friendly reminder in a form of written communication or via email. If a month has passed and you haven’t got the payment, it is time to remind once again and make a personal call.
On days 32-45, don’t hesitate to make calls and emails on repeat. If two months have passed and still no joy then take legal help to receive your payment.
Encourage Early/timely Payments by Providing Proper Rewards
We all love rewards, even if it’s very small. One of the proven ways to encourage early or timely payment is to give some discounts. Those who have made the timely payment, try to give a 5% discount or any other perks. Even though an incentive of 5% is small, it is a motivation.
Many businesses have witnessed a positive impact on late payment scenarios after adopting this approach. While you are considering this option, make sure that you are not offering anything which is beyond your capability. Offering a high incentive to receive a payment will also harm the cash flow, which no one wants.
Charge a penalty for late payments
Just as a perk is a motivation for early payments, charging a penalty for late payment will also help you boost up the invoice payment incidents. No one wants to bear a penalty unless there is a genuine reason for late payments.
Update the records regularly
Invoice management is an uphill struggle and because of this reason, only many businesses ignore it or overlook it. When records won’t be updated regularly, finding out the pending payments won’t be possible.
Make sure that invoice details are entered from the moment a deal occurs. With automatic invoicing software, this job becomes easy and possible.
This tool can capture the details directly from your POS or billing system. Using such software, you can easily send invoices and get paid online. The manual data entry is very less and businesses can manage to capture every single detail without fail.
The tracking would be real-time and realistic. So, you will have a clear picture of the pending amount and can proceed accordingly.
While running a business, you will get to meet all kinds of customers. Some will have hearts of making payments on time while others will consider it as a burden. Businesses, which have managed to learn the art of encouraging timely payments, will be able to thrive.
Use an Online Invoicing Software to send invoices and get paid online. It will increase the cash flow at multiple levels. Other than this, be stringent and strict about tracking payment progress and send reminders. Your invoice is right and one must not have a casual attitude while dealing with it.