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What is the best invoice wording for immediate payment? | Chaser

Written by Sonia Dorais | 8 Sep, '23

Building customer relations takes time, no small amount of effort, and consistently excellent products and services. However, all that diligent work can be quickly undone by a few late payments or even our poor handling of outstanding balances.

Long-term success often comes down to something as simple as getting the wording of the invoice just right. After all, if you want clients to pay, you must give them clear instructions in a professional and friendly manner.

The following guide to invoices will take you through the best wording to encourage prompt payments and a few other ways to ensure your clients pay on time.

 

What is the purpose of an invoice?

Let's start at the beginning. Beyond simply instructing a client to pay, an invoice serves many different purposes. Here's a quick overview:

  • Contract: Invoices are a legally binding agreement showing that both parties consent to the quoted price and payment conditions.
  • Record keeping: Invoices keep a legal record of any sale or service.
  • Tax returns: Invoices help your company with its annual income and expenses for tax compliance.
  • Payment tracking: This allows both a buyer and seller to keep track of payments.
  • Business analytics: Invoices allow businesses to gather information on customers' buying patterns to identify trends and leverage business decision-making.

In an ideal world, clear invoice payment terms will lead to an immediate payment. Whether it's a full payment or the payment of any funds due upon receipt, getting paid immediately following job completion is arguably the most important aspect of your relationship with the client. As such, the value of invoices on your business day cannot be underestimated for a second.

 


Why is the invoice date important for cash flow and business accounting?

Every small business should use invoices to track payments and protect themselves with legally binding contracts. However, sending invoices quickly will provide clear payment instructions and set out your payment expectations. In turn, this can lead to prompt payment, which is essential for the ongoing health of business operations.

Sending an immediate payment reminder in the form of an invoice can also advise clients about any payment due upon receipt. Ultimately, then, the invoice date is of huge significance as it will increase your hopes of creating a positive cash flow. Whether looking to establish greater stability or strengthen the business's position ahead of an expansion, a dedicated invoicing system that encourages quick payments is a valuable asset that improves the company's financial health. It may;

  • Increase the number of clients that make an early payment thanks to your due upon receipt notifications.
  • Improve the rate of accounts that make an immediate payment, especially as the product/service will be fresh in their minds.
  • Reduce the threat of bad debt caused by unpaid invoices while also avoiding the hassle of chasing clients over outstanding invoices.
  • Avoid the impact that unpaid payments from an accounting period may have on the cash flow statement and other accounting documents.
  • Help you avoid late fees on company expenses that are reliant on the revenue that comes from sales invoices.
  • Reduce interest charges on any bank accounts currently in debt while simultaneously boosting the interest accrued on accounts in credit.

If nothing else, when you receive payment promptly, small businesses can focus on other important assignments. Most companies will benefit from getting paid sooner, even if the due upon receipt amount is only a small percentage of the total invoice value. Setting invoice payment terms in a timely and transparent manner is the answer.

What should be included in the invoice?

When constructing an invoice following a sale or job completion, it's important to acknowledge the purpose of the document and ensure that the right invoice wording is used to ensure the customer pays in a timely manner. This should cover all payment terms ranging from the total invoice amount to the expectations regarding funds due upon receipt.

The first thing about getting the wording right is to ensure you are including all the required wording for the invoice. So, to tick the boxes and encourage people to pay, you will need;

  • Title: There has to be some specification that the document is, in fact, an invoice so put this clearly at the top.
  • Number: Every invoice needs a unique number for record-keeping and the numbers need to be sequential.
  • Your details: Include your business name and address, as well as any other contact details.
  • Customer details: Include your customer's name and address as well, and they might require VAT numbers.
  • Supply date: The supply date is when the goods or services were issued, not necessarily the date when the invoice is sent.
  • P/O number: The purchase order (P/O) number, if supplied by the customer, must be included on the invoice.
  • Invoice date: This is the date when you send your invoice out.
  • Product/Service: The goods or services you're providing need to be clearly outlined with a separate line for each item.
  • Amounts : This is the amount of each item per line and then you can include the total amount payable at the end.

Important invoice terms

Our invoices should be as clear and concise as possible. Otherwise, you will run the risk of not getting paid due to client confusion. Therefore, each of the following elements found on your invoices should be easy to read and simple to find.

  • Payment terms : This is possibly the most critical wording on your invoice. You need to clearly state the terms and conditions of payment, as agreed upon by you and your customer. This can be included at the end of the invoice, but make sure it's clearly visible. This could include 50% of payment owed before work begins or payment within 30 days. You also need to outline what the penalties are if they fail to pay within the agreed-upon time.
  • Due date : This is a major inclusion, as the due date has to be clearly outlined or you might never get paid. Most businesses require payment 30 days after the invoice is issued. Whatever it is, ensure you also keep a record of this so that you can keep track of your outstanding payments. It might even be easier to say ‘payment is due by …' and include the actual due date so there's no confusion.
  • Payment method : You want to make paying an invoice as simple as possible, which is why you need to include all possible payment methods on your invoices. Cash, debit or credit card, portals or other methods can be included on the invoice.  Make sure your banking details are correct and you might want to request proof of payment as well.

Invoices should enable clients to pay by the agreed due date without obstacles or problems. By sending them a receipt of their payment too, clients should be able to maintain good organisation too.

 


What are the invoice payment terms?

If you're new to invoicing and haven't yet outlined your payment terms with the client then this task must be viewed as a priority. Otherwise, invoices will continue to deliver limited results and impact your cash flow in a negative manner.

You'll want to include this industry-standard terminology that is both clear and unambiguous.


Payment in advance (PIA):
If it's a big job and you're working with a new client – or a client with a poor track record – then a PIA is a smart idea.

Net (N): This is a payment term that refers to when the full payment is due. For example, ‘Net 30' is payment within 30 days.

End of Month (EoM): This means full payment is due within the number of days stated after month-end.

Month Following Invoice (MFI): The full amount is payable on the date specified before MFI – so 15MFI means payment is due on the 15th of that month.

Discount: This is where you provide a discount for payment if made within the time stated.

Stage payment: You can offer your clients the option of paying in stages. Often this is 25% in the first stage increasing in quarterly increments.

If you’re new to invoicing and haven’t yet outlined your payment terms with the client then this is an important job to get squared away as soon as possible.

 

Invoice writing top tips

By now, you should know what you need to include in the invoice and why. However, here are a few other guidelines on the best way to express the invoice terms to ensure you get paid faster - or at least by no later than the agreed due date. For more information on this topic, see our our blog on how to write the perfect invoice.

1. Professional appearance

Even though including all the above-mentioned information is important, it's worth using a professional invoice template. If you're new to this, perhaps look at what similar businesses are doing to ensure that your communication looks professional. Sending a wordy email might get overlooked, but a concise invoice is difficult to ignore and reduces any threat of a client delaying payment.


2. Setting the right tone

Your requests for payment needs to be authoritative, while also being warm. Keep the invoice and accompanying letter concise, and don't use overly fancy language. You need to get across all the relevant information, including the due upon receipt details, without waffling on too long - if your client is confused, they're less likely to pay the invoice immediately.


3. Be polite

It doesn't matter whether the project is completed or the client was difficult. As a business owner, you must keep the invoice wording polite. The key is garnering repeat business and encouraging word-of-mouth marketing. Even when the client is paying late, conducting your business and wording invoices professionally is non-negotiable.


4. Send promptly

Send your invoice as soon as possible since you will have a much better chance of getting paid quickly if you do so. It's certainly not rude to send an invoice off as soon as work is complete. In fact, some customers actually prefer it as knowing the due date and payment term helps them stay organized and avoid a late payment fine or extra fee.


5. Get to know your clients

When you get to know your clients a little better, you can actually tailor the invoice and cover letter to them. Feel free to include a personal note to your clients, even if it's just a thanks for the prompt payment. Everyone enjoys personalised service and feeling like they matter, especially if they are a long standing client. The better your relationship, the more likely you are to get paid faster - so use their name, mention their project, and don't be afraid to get personal as a small business owner.


6. Offer incentives and fines

Some of the incentives you could offer include discounts for referrals, first-time customers or early payments. Late fees charged for unpaid invoices must be clearly explained to clients ahead of time. By covering both early payment and late fee rulings, you should receive payment far sooner.


7. Follow up

Rather than suddenly sending a client an urgent demand for payment with a surcharge for the fee, keep a watch on the due date and send a gentle reminder ahead of time. This can be a reminder stating, ‘We know this is a busy time of year, so this is just a quick reminder about the outstanding invoice due…'. Often just a simple nudge will encourage quicker payment. As well as getting them to submit payment, it helps maintain a strong connection between your business and the client.

What are the benefits of using invoice software?

Relationships and communication are certainly key to maintaining good client relations. However, in today's world, the best way to get immediate payment for invoices is to use invoicing software. It ensures that all clients are made aware of the invoice terms in no uncertain terms, which will encourage them to pay quickly. It also means that there will be an invoice receipt for easier business tracking.

Advanced business software can also send invoice emails to help clients pay at a time that's convenient for them. Further benefits gained from sending invoices courtesy of dedicated invoice payment software are detailed below:

 

1. Invoice customisation

Using invoice software, you can customise the appearance of your invoices to match your brand. There are also pre-made templates to work from. After choosing a professional template, you can then re-design it as per the requirements of your small business.

2. Secure payments

Integrated invoice software connects to a secure payment method that automatically collects recurring payments and can encourage clients to use your preferred payment method. This is particularly useful when there is a fee due upon receipt followed by subsequent payments. Regardless of the contract terms, secure payments also protect the business assets as well as the client's sensitive data.

3. Automate workflow

There's no more need for human input and error, the invoicing software eliminates this and also issues payment reminders to promote timely payments. An advanced invoicing system will also automatically chase overdue payments and deliver seamless integrations into the company's online payment portal while also automating the receipt for both client and company alike.

4. Better customer relations

Because the software offers more customer support and takes over the tough task of asking clients to pay, you benefit from improved customer relationships.

Chaser is one of the top accounts receivables software and debt collection services available. They're able to tailor collections for SMEs so that you don't have to worry about invoicing and late payments again.