Are you not able to realize payments from your current debtors? Do they create a lot of fuss when it comes to making payments? Well, if that is the case, then this article is definitely meant for you! Invoicing may sound very easy but is actually the most important and complicated aspect of doing business.
Invoices are the facilitators of the lifeline and blood of your business – money. A study showed that almost 60% of invoices are paid late. Hence, we need to curate better ways to ensure that the invoices are paid on time. However, before we dive deep into it, let’s first understand –
What is an invoice?
An invoice may be termed as a legal document, which binds the parties into a transaction and acts as an official document to mark the exchange of work between the two parties. In a layman’s term, it is basically an important piece of paper, which can help you in recovering money for work done.
This document comprises the details of the work done or the product purchased or the service offered. It should also contain the name of the party, the name, and address of the company followed by the taxes levied and the tax registration details of the company.
Now that we have gotten a brief idea about how invoices work, let’s look at the various tricks which you can apply to draft the best invoice for prompt payments.
- Having a Schedule is a Must
Your business has to have a proper schedule for invoicing. A payment schedule ensures that your customers are well aware of the probable payment dates and ready with all the necessary funds for ṣprompt and quick payment.
You must also indulge in regular invoicing as this helps in quicker realization of debts and funds owed by various debtors.
- Draft an agreement
A lot of times, debtors fail to pay the money as they are not legally bound, or they are not obligated to pay the money even if a vocal agreement was reached between the parties.
In that case, the best practice would be to ensure that you have an agreement with your debtor or you get the quotation approved along with an invoicing date.
This will ensure that the payments are received within the due date.
- Double check the taxes
The best part about invoices is that it helps to keep your business clean and act as direct documentation for the legal authorities. It is also dictated in the law that if there is a supply of work, the invoice needs to be raised within 30 days of product/service offered and cleared as well to avoid malpractice.
Hence the corporate taxation in Singapore also helps in realizing debts and ensures prompt and quick payments.
- Learn the Art of Persuasion
Even if the invoices have been emailed on time and there has been proper correspondence between you and the client, there might still be a delay in payments. In that case, you have to be persuasive with your invoices and also make the intention known to your debtor.
This will make the debtor realize the consequences of the default and they will surely process the payments.
- Purchase a good Software
A software application always helps in getting your invoices out faster, and as the saying goes, faster invoices lead to faster payments. Thus, a software can do wonders for your business and also help you in tracking the defaulters so that you can create a bad-debt realizations strategy.
There are a lot of innovative CRM tools that have integrated billing that along with real-time analysis of your billing cycles and payment duration.
- Send invoices at the right time
There are little things that, when gone wrong, can end up in delayed payments. Some of them are stated below:
- The invoices should never be sent on the last day of the week. For quicker payments and lesser delays, ensure the invoices are emailed at the beginning of the week.
- It should be addressed to the right POC or else there will be a lag in the payment as the invoice will then be transferred to the right POC internally, viewed and scrutinized and then paid.
- The invoice should be legally sound.
If you put these tips into practice, immediately, I am sure that you will be able to realize your payments well in time and prevent delayed payments and bad debts.