How to Best Ensure Invoices are Paid on Time

Ensuring that invoices are paid on time is crucial for maintaining a healthy cash flow. Here are some pointers to help ensure timely payments:

1. Set clear payment terms: Clearly state the payment terms, including the due date, how (payment methods accepted) and where they can pay (bank account details) on the invoice.
2. Attach any Supporting Documentation: For example POD(s), Signed Time sheet etc. This will help avoid any disputes / delays. This is especially useful if they reference price agreed and stated on invoice.
3. Send invoices timely: Send invoices as soon as possible after the goods or services have been delivered to ensure timely payment. Could enhance this by ensuring that the invoice has been received by the right person / department.
4. Check with customer in advance of due payment date: Contacting the customer a week in advance that all is in order for payment run (which will hopefully avoid point 5 below).
5. Follow up on overdue payments: If an invoice becomes overdue, follow up with the customer promptly to remind them of the outstanding payment and to resolve any issues that may be delaying payment. (Which hopefully shouldn’t exist following points 1-4). Repeat overdue invoices may be a sign of either a) poor admin on customer side or b) Cash Flow issues on customer side.
6. Offer incentives for early payment: Consider offering incentives, such as discounts, for early payment to encourage customers to pay their invoices promptly. Affordability will dictate if this is an option. Obviously if working on tight margins, you could be giving away your profit.