5 Simple Tips for Invoicing Customers
Invoicing is an important part of any business, large or small. Getting paid for the products or services you provide is crucial to the success of your company. There are a few tips that can help make invoicing easier and more efficient. By following a few simple tips, you can make invoicing a quick and easy process.
Tip #1: Set the Right Payment Terms
While the most common payment terms is net 30, which means that payment is due within 30 days of the invoice date. There is no one size fits all. You need to determine the right payment terms for your business. However, you don’t want to deviate too much from the acceptable terms for your industry.
Tip #2: Allow Customers to Pay Online
Most people now use plastic over cash or checks. Giving your customers the option to make their payments directly online using a credit card or debit card not only makes it convenient for your customer, but you will get paid faster than waiting for a check to arrive via snail mail.
ZarMoney allows you to email customers their invoices that include a payment link. Once your customer makes their payment, you receive an email notification, and the invoice is marked as paid automatically in ZarMoney.
Tip #3: Review Your A/R Aging Report Weekly & Follow Up
As I mentioned previously, if you use ZarMoney or another accounting software, then you can easily run an Accounts Receivable Aging Summary report. Below is a snapshot of an A/R Aging report created in ZarMoney:
A/R aging report created in ZarMoney Online.
This report categorizes all open customer invoices into the following groups:
- Current invoices that are not yet past due
- One to 30 days past due
- 31 to 60 days past due
- 61 to 90 days past due
- Over 90 days past due
We recommend that you review accounts receivable aging summary report weekly and take action. In general, most people will take a reactive approach and wait until an invoice is past due before following up with their customers.
Instead, try taking a proactive approach by sending the customer a friendly reminder a few days before the invoice is due.
Tip #4: Consider Offering Customers a Discount for Early Payment
One of the ways you could get customers to pay you faster is to offer an incentive. Early payment discounts are a great solution for those customers who always tend to pay late. The way it works is you could offer a 1% or 2% discount for payments made within 10 days of the invoice date.
If the customer does not make the payment within 10 days, then the full amount of the invoice is due based on your standard terms like net 30.
Tip #5: Invoice Factoring
If you have several outstanding invoices that you are waiting on and need quick cash, then you may want to consider invoice factoring. Invoice factoring allows you to get funding based on your outstanding A/R balances, as long as you invoice at least $50,000 per month ( in most cases).
If you don’t invoice at least $50,000 a month, accounts receivable financing is a more flexible option. There are a lot of companies providing A/R financing which offers no-credit-check A/R funding for up to 100% of invoice value.
In conclusion, following these invoicing tips will help your business to be more efficient and organized. By keeping track of your expenses and sending accurate invoices, you can avoid any confusion or misunderstandings with your clients. Keep in mind that the better your invoices look, the more likely your clients are to pay on time. So be sure to put thought into the design and layout of your invoices.