Business Consulting 101 - Best practices to get your invoices paid on time
Best practices to get your invoices paid on time.
While most people readily pay their dues on time and keep their incomings and outgoings on track, a few need more tricks of the trade to help persuade them pay their bills on time. At the end of the day, any small business owner knows that even a single unpaid invoice affects cashflow and could render the business into a cash strapped entity.
The Heading - Hit the nail right on its head
Marking the envelope and title the top of the invoice page “INVOICE” in bold letters ideally in red will certainly garner maximum attention. This small initiative will help your piece of paper reach the right designate from the moment it gets delivered. Inclusion of your company name and logo on the next most prominent line is ideal (Time tested practices and psychological studies indicate people are more likely to remember images and logos than words. See the connection here - INVOICE + Company Name + Company Logo - Subliminally impregnates the memory of the invoice). A remembered invoice is more likely to be paid promptly.
An Itemized Listing - Make the content the focus
Making sure all products or services are clearly itemized is a definite way to make your invoice more understandable. A detailed list will save time wasted through additional correspondences trying to understand the invoice. So does the itemized listing as do the logo to help your recipient remember.
The Perfect Payment Terms - Dates, Penalties and Incentives
Always make sure to clearly and boldly state that “payment is due within X days.” A good idea is to include a warning about late fee policies or penalties that will be charged for late payment. An invoice with a late payment fee is most likely to be bumped to the front of a list of invoices that need payment. It is also wise to include a Y% discount for early payment. Studies indicate the inclusion of a “please” in the request for payment increases the likelihood of the invoice getting paid on time.
Offering a variety of payment options is considered to be one of the most influential factors forgetting paid on time. The greater number of payments options your recipient receives, the more likely your invoice gets paid on time. Digital payment methods, even for traditional businesses will do a world of good for getting paid on time.
The Bottomline - Express your invoice with a bold-stern-voice
Including a headshot of the head of the company in the contact details of the invoice creates similar psychological pressure to physical presence. Personally signing the invoice (even possible on digital invoices) psychologically influences the recipient to feel compelled to pay akin to a personal interaction asking for payment.
Easy-to-find direct contact details of a designate able to answer billing queries quickly will be helpful in case your customer has questions. Studies indicate the inclusion of a “thank you” in the invoice signature increases the probability of on time payment.
The Color Scheme - Play the psychological game
Studies indicate that the psychology of colours plays a great deal in getting things done to your liking. Blue is associated with trustworthiness, Turquoise is the best colour for attention-grabbing words such as “second notice.” Turquoise is not a frequently used colour and hence will help you stand out that much more. Purple is another great option highly favored by women. Darker shades of purple indicate firmness and competence. It is prudent to avoid yellow and brown, on invoices as a best practice.
If you need assistance in designing your invoice document or need help with setting up digital payment modes for your traditional business, please do not hesitate to contact us at IBHYA on +918939998998