We all know that great feeling when we hit ‘send’ on an invoice. But here’s the thing – your job isn’t done yet, for making sure that money hits your bank account, it’s just the beginning. Hear from Paidnice, an online payment provider about the crucial steps you should be taking after sending that invoice to make sure that it gets paid on time, every time. 

It’s important to make sure you’ve got clear invoicing and payment terms (use these free templates). These are usually in your terms of engagement that your customer has received before work starts.

In NZ, customers just need to be aware of them – so before you start any work pop them in an email or attach them to your quotes.

Pro Tip

Add these terms on your website (or hosted as a PDF on your website) and embed them as a link in your email signature. That way, every communication includes your engagement and payment terms.

1. Send Invoice Reminders

We’re all busy people, so it’s not uncommon to forget important things like invoices. Because we’re all human, you’ve got to keep that invoice front and center in your client’s mind. Set up invoice reminders to go out shortly before the due date, on the due date, and if it’s still unpaid, after the due date.

Pro Tip

Make sure these reminders are going out during business hours. You’ll be guaranteed to receive your clients’ attention at 10 am vs at midnight.

Consider also experimenting with SMS reminders alongside email reminders. Text messages have a 95% open rate compared to a measly 30% for email reminders. Sending the right message, at the right time, and via the right medium ensures that your clients know you are on top of your outstanding invoices.

If you’re using Xero, you can automate email reminders with their default options. 

2. Charge Late Fees

A carrot is always better than a stick – but the data shows that both work well for getting paid on time. Charging late fees might feel a bit uncomfortable at first but consider this for a second. The work you are doing is essentially on credit until you’ve been paid for it. If you were a bank, you’d be charging interest on that credit. So why be the free bank for your customers?

Consider adding overdue late charges to your invoices. The best practice is an annualised rate (2-5% per month is standard) – as if you were lending money to your customer. This encourages your clients to pay you ASAP so that interest doesn’t keep piling up.

Calculating an annualised rate sounds like a headache. Unless you are an Excel whiz, then it is. That’s where tools like Paidnice come in handy. It automates the whole process of calculating and issuing the late fee to your client. Plus, when they call you up asking you to forgive those late fees if they pay you tomorrow, you get to blame the system for it. It’s cheeky, but effective. 

Try a discount instead of a late fee

If you prefer the carrot (a discount) over the stick (late fees), consider a prompt payment discount instead. For example, offering 5% off the invoice total if they pay within 7 days of invoice issuance can be just as (if not more) effective as a late fee. Plus, it gets money in the bank much quicker than a standard 30-day term.

3. Send Monthly Statements

This one’s simple but powerful. A statement is just a summary of outstanding invoices (and any accrued late charges) that your customers have at any point. Xero can generate a basic one of these for you on-demand, but you’ll need to manually send them to your customers.

Statements are worth their weight in gold when you’ve got multiple invoices outstanding or overdue for the same client. The key is consistency – send these statements each month for any outstanding amounts, even if they’re not overdue yet. It subtly signals to your clients that you’re keeping tabs on what they owe you. Ensuring you leave no invoice forgotten about.

4. Escalate Overdue Invoices to a Manual Intervention

If you’re sending out 50+ invoices a month, chances are you’ve got a few stragglers in your overdue list. It’s normal, especially if you’re juggling new and existing clients. But here’s where you need to be on your toes.

You need to set up a clear escalation workflow for invoices that are, say, 30+ days overdue. This could mean stopping credit (nothing lights a fire under a client like needing more work done!), sending a legal letter of demand (if things are getting serious), or simply picking up the phone for a chat to see why payment is being delayed.

The key to success is having this process in place to begin with – whether it’s manual or automated. This ensures you’re consistent with your accounts receivable processes for all invoices and all clients.

Final takeaway: Consistency is key

These four tips are guaranteed to ensure that when your clients are staring at a pile of invoices, yours will be the one they prioritise. And if you can automate this process? Even better. You’ll be freeing up time to focus on what you do best – running your business.

Getting paid isn’t just about sending invoices – it’s about having a system in place that holds that invoice’s hand until it’s turned into cold, hard cash in your bank account.

Give these steps a go. Your bank balance (and your accountant) will thank you! 

Author:  Denum Bird, Co-founder of Paidnice

Paidnice are one of SBA’s partners and offer online payment solutions, check them out here.