Implementing the kind of credit control that keeps your debtor days to a minimum and gets you paid faster is all about organization.
Keeping track of your invoices and payments means you know when to chase your customers for payment, prevents you from chasing invoices that have already been paid, and gives you greater control over your accounts receivables.
If you're struggling with unpaid invoices and feel your late payments are getting out of hand, read on to find out how accurate invoice tracking could be the solution and what steps you can take to implement it.
Invest in good accounting software to keep track of invoices
If your accounts receivables are still running on pen and paper, it's time to transfer them to a more efficient digital option. Paper invoices are not only hard to keep track of, but they're also not very eco-friendly. Tracking invoices and payments is immediately easier with the right accounting software and it helps your business move towards greener practices.
There are plenty of excellent professional accounting software program options available on the market, such as AccountsIQ, MYOB, FreeAgent, Quickbooks, and Microsoft Dynamics 365 Business Central. All of these options will allow you to track your invoices and payments in an efficient, searchable, and organized manner.
Most cloud-based accounting software programs also have a huge app marketplace that you can use to modify the base software to match your business needs.
For instance, while any of the programs above are an excellent choice for accounting software, adding the Chaser add-on to any of them can drastically improve your credit control.
In turn, this will reduce the amount of time you spend waiting for late payments.
Chaser's Payment Portal places all the payment and invoicing information you and your customers need in one easy to access location.
Accessible from any of our automated invoice reminders, the Payment Portal lets your customer see all of their outstanding invoices, not just the one related to the reminder. This increases the chances of them making payment on all their outstanding invoices and reduces the admin burden on you.
No need to worry about sending out multiple copy invoices when your customers can access them all in one place. Keeping track of invoices and payments becomes simpler not just for you but also for your customers.
In our experience, the quickest way to get paid is to make it as easy for your customers to pay you as possible.
Chaser makes a range of other invoice management tasks easier too, from the option to generate invoices to processing invoices. Our templates simplify multiple essential tasks so the invoicing process is faster and more efficient at every stage.
Understand and implement invoice management best practices
We've already spoken about the importance of having your payment terms clearly stated in your contract.
If you want to get paid on time and want to make it easy to track your invoices and payments, you need to apply the same rigor to your invoicing.
When it comes to sending an invoice, there are a couple of things you can do to make sure you get paid on time and make it easier to keep your accounts receivables up to date.
Focus on the details
It's always a good idea to include as much information as possible in every invoice. You want your client to be able, at a glance, to identify exactly what your invoice is referring to.
It's always a good idea to include as much information as possible in every invoice. You want your client to be able, at a glance, to identify exactly what your invoice is referring to.
Rather than just including the client's purchase order number, although that should always be on there, include as much detail on the project as possible. That way, the customer has no excuse for misunderstanding the invoice and you'll find it much easier to track down the invoice yourself, should you need to.
When creating invoices, there are several key details you will want to include. Apart from the purchase order number, make sure to include a unique invoice number on each invoice. Keeping track of invoices and payments is obviously a lot easier for both you and your customer with this reference. The invoice should also include clear details about the purchase, including a breakdown of different items and VAT if it's applicable. The customer's name and contact details should also be there, helping the customer to confirm that it's definitely the right invoice.
Set the correct due date
Most accounting software will put a basic due date on any invoice you don't specifically change. Normally this due date is the industry standard of 30-days.
We've spoken before about how important it is to adjust your due dates to suit your client's fulfilment processes. Sticking to a generic due date for each invoice could see your payment delayed by a month for lack of adjusting that date by a day.
Having the correct sending and due dates will also make your invoices and payments that much easier to track, whether you use invoice tracking software or not. If you send recurring invoices to repeat customers, be sure to change the date to match the latest order so recurring payments are easier to track too.
Have the correct payment and contact details
Invoicing is part of the job that is often done on autopilot, especially if you've been using the same processes or templates for a long time.
Having the correct payment and contact information on your invoices is vital to avoiding delays and you should always check those details are correct before sending an invoice.
Make payment easy
Your customers don't want to have to spend too long sorting out their payments. Like you, they're often busy business owners who want to do things efficiently. The faster they can do it, the more likely it is that they will pay on time. Using Chaser's Payment Portal is a fantastic example of how you can speed up the payment process and generally make it more convenient for your customers.
Start by providing payment links in your invoice reminders. This allows your customers to click on the link and automatically be taken to the right place to pay. You can also embed payment options in your reminder emails to speed up the payment process. Multiple payment options are key to encouraging timely payments. If your customers can use their preferred payment method, they're much more likely to pay when you ask them to.
It's also essential to reassure your customers that their payment details will remain completely secure. Chaser Pay offers secure payment, with choices such as Apple Pay, open banking, and Amex. With the right software program, you can keep track of payments from whichever source your customer chooses to use.
Chase Often, but Chase Accurately
As soon as your accounting software flags an invoice as overdue, you should be following up on it.
As a rule, chasing late invoices is one of the most common, but most time and effort-intensive parts of credit control. It's also one of the most frustrating, as you're essentially wasting time chasing money you've already earned, rather than spending that time growing your business.
The good news is that there are ways you can chase every overdue invoice without spending all your time sending emails.
Chaser's automated reminder automatically follow up on unpaid invoices. Each reminder can be modified by you to match your business's tone of voice and the relationship you have with your customer. All emails will also seem to have come from your usual email address.
In effect, it will look like you're sending personalized reminder emails, adding the human touch back into credit control automation while retaining all the efficiency benefits.
Because the system is automated, it will never send a reminder email to a client that has already paid you and will follow up every payment with an automated ‘thank you' email to build on your business relationships.
Chaser also offers payment reminders by SMS. SMS is an effective form of communication, with a high open rate. This increases the chance that your reminders will be seen and will engage your customers to encourage them to pay. Like emails, SMS messages can be personalized to suit each customer and get the payment and invoice details correct. Automated reminders make payment collection so much easier, saving so much time in the invoice tracking process.
Using Chaser to stay on top of their accounts receivables has allowed our customers, on average, to save more than 15 hours per week on credit control management and get paid 16 days sooner!
Identify issues and adjust your approach
Using Chaser can help you streamline your invoicing and payments, saving you a lot of time. Once you begin to make improvements to how you keep track of invoices and payments, you can keep the momentum going. The information you collect from tracking your invoices and payments can help you identify potential issues and make adjustments to how you do things. It's useful to automate your invoice chasing and keep track of everything, but is there anything you can do to avoid having to chase at all?
There could be several things you can change to ensure your customers are paying on time. Prompt payments will give you a healthier cash flow and it can improve your relationships with customers too. No one wants to have to drop a client or customer because they're always paying late, so what could you do to prevent that from happening?
Choosing to follow best practices for invoice management is certainly a good start. However, there may be other steps you can take for even better results. Use the data from your invoicing software to track payments and identify patterns, including who is more likely to pay late and what their reasons might be.
Do you have a customer who finds it difficult to pay the whole invoice at once? Setting up a payment plan or splitting the invoice into several payments could be helpful. Perhaps your requested payment date doesn't line up with a client's business's cash flow. You could work out a better date for them that would enable them to pay more promptly so that there's no need for you to chase them.
Offer incentives to encourage your customers to pay on time too. Making a courtesy phone call to thank them for their payment can be enough to show them you care. Some business owners might even decide to offer discounts or rewards for prompt or early payment.
Of course, there are times when too many late payments can get frustrating. Sometimes it's necessary to assess the value of the customer and decide if it's worth keeping them on. Ending a relationship with a customer is a tough decision, but it can occasionally be the right one.
Produce reports
After you have your payment tracking software and accounting software set up, be sure to run reports regularly. Producing important reports, including a profit and loss report, will give you vital information about your revenue and expenses.
Your profit and loss report will add up all of your invoice payments and subtract your spending for an accurate picture of your business's finances. You should use these reports to inform your decisions about what your business spends and to give you useful information about your income. A profit and loss statement is pretty simple, but it can reveal more than you think.
You can also produce reports that look closely at your professional invoices and payments. Compare the amount that you invoice with the payments you receive for an accurate picture of your invoice management. You will be able to see how overdue payments are having an impact on your finances and how big the gap typically is between invoiced amounts and received payments at any time.
Let Chaser help you get paid on time
Chaser's combination of innovative features and efficient automation makes it easy to track your invoice, stay on top of payments, and implement effective credit control.
To understand how Chaser can get you paid earlier and more often, book a demo with us today.
