Not getting paid on time? It might not always be the customer’s fault

Strong cash flow is still one of the most critical factors in ensuring the long-term success of your business. And while rising interest rates and inflation may hamper your customers’ cash flow, causing them to pay invoices late, it may not always be their fault. That’s because invoicing is a two-way process. As the supplier, you need to send the invoice, and then the customer needs to receive and pay it. There are key things you can do to make the invoicing and payment process easier for customers, which will drive faster payments. Proactively doing these things can help you mitigate possible payment delays. Keep reading to learn how to improve your invoicing and payment processes.

Make sure invoices are accurate

What might seem clear to you as the supplier when you send an invoice may be unclear to a buyer. Ensuring every invoice is accurate and includes all of the information the customer needs to make payment can reduce your payment times.

Here’s the key information that you should include on every invoice:

• The invoice date and due date: Make this specific, not simply, “Payment due within 14 days of receipt”.
• Payment terms: Include the payment options available to the customer, refund terms, and what happens if payment is late. To encourage faster payments, you could also offer early settlement discounts, showing how much customers will save by paying before the due date.
• Clear itemisation: Set out each item or service that the customer has purchased on a separate line. And don’t forget about using the description field in your invoicing system to outline the specific product details or the work completed for services.
• Payment methods: Make it easy for customers to see how they can pay the invoice. When using an integrated payment solution, this can be done through a button that appears on every invoice. All the customer needs to do is click the button and choose how they want to pay, making the process efficient and easy.

The invoice delivery method is another key area that can protract or shorten payment times. With most invoices still paper-based or PDF, it becomes difficult to track if the customer has received or viewed the invoice. Consider sending invoices using eInvoicing or through an integrated payments solution so that the invoicing data can be integrated into the customer’s accounting system to save time and reduce data entry errors.

Reduce friction and make it easy for the customer to pay

Once you’ve sent a customer invoice, the next step is for them to review and pay it. To determine what you can do to make payments easier and get paid faster, consider the customer’s experience opening and paying the invoice. For example, can they easily click a button on the invoice to pay online? Or do customers have to manually pay with the electronic funds transfer (EFT) details provided on the invoice? If manually entering the payment information into the customer’s accounts payable system is the only way to pay an invoice, it creates friction and can slow the payment process.

There are a number of other things your business can do to make the payment process as seamless as possible. To reduce friction and make it easy for customers to pay their invoices, you should:

• Deliver invoices using a Pay by Link functionality where you can send customers a link to access their invoice or statement, along with integrated payment options. This enables customers to receive the invoice and conveniently make secure payments wherever they are.
• Offer a variety of payment methods, including card payments and bank transfers at a minimum.
• Provide access to third-party finance that gives you certainty over payments and allows customers to make payments that are better aligned with their cash inflows.
• Customise your payment interfaces with an integrated provider that has responsive checkout pages and other features that make it easier for customers to purchase and pay.
• Leverage integrations to make accounting, reconciliation and reporting more accurate and efficient. With an integrated payment solution that syncs with commonly used accounting and enterprise resource planning (ERP) software, invoicing and payment data becomes a single source of truth to filter through to other systems. This reduces time spent on manual data entry and provides the both transaction partners with access to the same financial dataset.

Get paid faster with Spenda

Sometimes, a customer may be dealing with cash flow challenges, and it causes them to pay your invoices late. However, there may be things you can do to improve your invoicing and payment processes to get paid faster and collaborate easier with customers on every transaction. By managing these processes through an integrated payment provider, you can boost your cash flow by getting paid faster and realise a range of operational efficiencies, including reduced manual data entry and faster and more accurate reconciliation and reporting.

Spenda is an integrated business platform that enables businesses across the supply chain to sell better and get paid faster. We serve as both a software solutions provider and a payment processor and deliver the essential infrastructure to streamline business processes before, during and after the payment event. Our connected platform displaces multiple, disparate systems in favour of one collaborative solution that improves transactional efficiency between businesses.  

This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.