How small businesses can get paid quicker
Many small businesses rely on quick payment of invoices to cover business expenses and maintain a steady cash flow. Prompt payments can also help improve the financial health of a small business as well as making the entire invoicing process run more smoothly.
However, for many small businesses, business admin is a task which can take up a lot of time, including processing and submitting invoices. This leaves many rushing to complete invoices, resulting in costly mistakes. This considered, it’s perhaps no surprise that the latest survey from the Office of National Statistics revealed 54% of active trading businesses are now facing mounting problems with unpaid invoices.
Twyla Verhelst, Head of FreshBooks’ Accountant Channel, reveals the top five simple and easy invoicing tips to help small businesses get paid quicker.
- Create an accurate online system
Having an online system in place to keep all of your accounting organised is key, and the more organised you are, the less potential invoicing headaches you will face further down the line. In today’s technology-driven era, choosing the right business accounting software is extremely important, and the first step in creating a reliable invoicing process.
Despite the clear advantages of managing invoices digitally, a sizable minority of businesses have still not yet made the leap to online invoicing. For example, the Purchasing and Accounts Payable Survey 2021 revealed 24% of businesses still use paper invoices – not only does this take up a lot of time for the individual filling these out, but it can also delay payment.
- Make the payment process simple
This might sound obvious, but you would be surprised by how many small business owners make getting paid unnecessarily hard for their clients. For example, some freelancers and small business owners decline to accept credit cards to avoid paying high credit card transaction fees.
In addition, if clients are slow to pay because the payment process is more difficult for them, the lost time and expense of trying to chase down the money can quickly exceed the cost of accepting credit card payments.
Each client will have their own preferred payment method, for example some will prefer direct payments into a business account, whilst some would rather pay via PayPal or credit card. In addition, some clients may prefer more traditional payment methods, such as posting a cheque. The key point to emphasize here is that you should discuss payment options with your client before sending them an invoice to ensure payments can be made quickly and easily.
- Create a checklist of invoicing essentials
When you’re busy it can be really easy to rush an invoice and make a mistake. Having a checklist to hand when submitting invoices can not only be a time-saver but can also help to avoid a no-payment situation.
- Set up recurring invoices for long-term clients
Setting up recurring invoices is the ideal time-saver. These can help speed up payments, improve workflow and free up time for other, more important business activities, especially if there is a long-term job set up with an individual client.
You can simply enable this function when you set up an account with FreshBooks. You can set-up the format of the invoice and schedule when you would like the invoices to be sent out.
- Set up ACH payments
ACH or Automated Clearing House is a network that connects banks. This network helps people easily and quickly transfer money between these different banks without the need for checks.
This is a great way to ensure clients settle invoices the way you want. It also means getting paid as fast as credit cards, with a fee of only 1% per transaction.
Setting this option up takes five minutes and it’s a simple but effective way of getting paid more quickly.
Verhelst, states: “Invoicing is a critical procedure for all small businesses and when payments are not made on time it can lead to frustration and put undue pressures on company cash flow as well as impacting relationships with suppliers.
“Having a clear, streamlined invoicing process will transform the payment process, so you can then follow the same procedure every time. It’s useful to get invoicing software in place as this will help to quicken the payment process and help relieve any unnecessary stress. It will also provide suppliers with a document that is easy to follow, helping them to pay invoices faster.”