The better your invoices are, the more likely they are to get paid. Did you know adding a logo to your invoice means clients are 300 percent more likely to pay them? It’s a strange phenomenon, but it makes sense. An invoice with a logo looks more official, and official invoices are more likely to get sent to collections if they’re not paid—and in a timely manner. It’s not really a “scare tactic,” but rather a means of ensuring your clients see you as you are: Professional and worthy of getting paid for your goods and services.
The cash flow of a company is truly its bread and butter. No cash means no pay, and no pay means no work, no employees, and no sustainability. It would be great if you didn’t even have to invoice. Clients would pay immediately upon receipt of services or goods, but most businesses can’t operate that way. You need invoicing for those must-have items like bottled water, printer paper, and sometimes even most of your goods (i.e. for wholesale suppliers).
The harsh reality is that invoices can go unpaid—to the tune of 16 percent on average. At Due, we conducted a study where 250,000 invoices were analyzed. As a company renowned for making invoices faster, simpler and yes, better looking, we knew that there were some tricks to getting more invoices paid, and in a timelier manner.
The full results were posted on Intuit QuickBooks’ website. Check out the QuickBooks feature, or read on for detailed findings and to discover how you can improve your invoice game.
Numbers Don’t Lie
Let’s start with the good news: After studying one quarter of a million invoices, we at Due.com found that 18 percent of invoices are paid in full within a 24 hour period. That’s pretty impressive! However, keep in mind that the average invoice amount is $365, which is a pretty modest amount. That’s also good news, since lower invoice amounts result in a better chance of getting paid. Even though your client (should) know what to expect with their invoices, they can still get sticker shock. It’s tempting to put a $1,000 invoice on the backburner, but a $365 invoice isn’t going to make a huge dent.
In total, 63 percent of invoices are paid on time, with the average due date being 30 days from receipt. This is where the numbers can get a little dismal. Start making quick, easy, and free changes now to up your odds of getting paid. You already know to add a logo, but what about a due date? That addition means you increase your payment odds eight fold. You’d think a due date would be a no-brainer, but one quarter of all invoices studied didn’t have one.
How can you expect your client to pay you if they don’t know when it’s due?
Stacking the Odds in Your Favor
With a 16 percent unpaid rate, most companies should be hustling to do everything possible to get those invoices paid. Payment terms clearly stated on an invoice ups payment 1.5 times. Only send the invoice to one person for an even higher return rate. Every time you add another person to the invoice recipient list, you’re lowering your chances of getting paid. It’s really easy to pass the buck to someone else, and if your recipients see a hoard of other people listed they’re more likely to think it’s someone else’s job to cut the check, send the PayPal payment, do the direct deposit, or otherwise send you the money they owe.
However, the best way to ensure payment begins well before the first invoice is sent. Contracts are designed to protect everyone. Make sure they spell out payment terms, due dates, invoicing strategies, and late fees. Always get a contract drafted before taking on a new client, and know that you can always backtrack. A client should want to retroactively sign a contract with you in order to protect themselves.
You can also bait clients to pay on time (or early) by offering a small discount. Two percent is often enough to get the stragglers on board. There’s no rule that says you have to offer this discount to all client, or even make it public knowledge. Offer it to everyone, or just to the clients who are late time and time again. They’ll feel like they’re scoring a win, when really it’s you who comes out on top.
Who’s in Your Corner?
There’s no need to wrangle invoicing alone. In fact, you shouldn’t have to! A subscription service to an invoicing software like Due.com’s can make this AP/AR nightmare into a dream for you. It’ll take care of recurring payments, analyze trends for you, keep templates that are customized just for your business and/or each client, and basically operate as an invoicing guru (and it doesn’t even require health insurance or vacation benefits!).
Plus, Due.com’s software is designed to help you accept as many payment methods as possible. That’s another way to encourage client payments. Whether they want to pay via Venmo, direct deposit, PayPal, paper check, credit card, or even bartering for video games if that’s the deal you worked out, it’s all good with Due.com.
Hungry for More?
I wrote Get Paid on Time: The Complete Guide to Invoicing for Intuit QuickBooks, and it’s a great resource for anyone looking to improve their invoice returns, to make invoicing easier, and to simply get paid what you deserve. This guide is free and spilling over with very digestible advice nuggets.
It’s not easy to start, own, or manage a business, and invoicing can be your downfall if you’re not careful. Unpaid invoices can lead to bankruptcy at worst and monthly headaches at best. Luckily, Due ensures that invoicing is one less task you have to worry about. Explore now and discover just how easy getting paid can be when you have a subscription to this software on your side, customized just for you and your business.