It’s every freelancer’s or small business owner’s to not hear anything from the client after an invoice was sent. While clients who pay late may not be 100% avoidable, did you know that carefully crafting your invoice will help you get your money faster?

Apparently, choosing your words wisely can encourage clients to pay on time! 

Immediate payment

For small businesses, freelancers, and small business owners, having your clients pay their bills on time is vital. Your business has bills to pay so it’s important to get your money as soon as possible. This is why chasing your clients for payment is no fun. This is especially difficult when the invoice gets passed around within their company leading to the invoice being forgotten or overlooked. 

How fast should invoices be paid?

This largely depends on your needs as a company, but most in the service industry have an ideal 30-60 days standard. You may also adjust this based on the length of time a client is availing of your service. For example, you can require a long-standing client to pay within 60 days, but only 30 days for new ones.

How much should be charged for delayed payment?

Ideally, you can charge up to 1.5% of the total invoice if they don’t pay in spite of your efforts to remind them. Take note though that individual states have different usury limits so you have to research that. To help you, always add a notice regarding interest charges or penalties for overdue payments in your invoice.

Tips for wording your invoice payments

If you’re wondering how it’s possible to encourage timely payments just by how you word your invoice, here’s how:

Utilize a professional template

In this time and age, you should now be using the internet as a platform. Send a plain and straightforward email including their due date and their balance. The more concise, the better. People tend to not read longer emails, so make sure to keep it short. You may also use a professional invoice template to help you draft your email, and invoicing software, such as Probill to help you process your invoices.

Insert a personal message

A little personal message will definitely help as well. This is also a way to form a connection with your clients and to remind them that you’re a real person too! A simple thank you message should suffice once they have settled their accounts. 

Include clear and straightforward payment instructions

To make it easier for your client, provide detailed instruction on ways on how they can pay. This will help them understand how and should encourage them to pay promptly. 

Emphasize the due date

While there are people who still won’t pay despite knowing the due date, there are also people who would! So emphasizing the due date is a great addition to your invoice. It would be more useful to put the actual date than a timeframe, but the latter should work too.

Days versus net

Both terminologies hold the same meaning, but not a lot of people know what a net is. So, it would be clearer for your client if you just use days. For example, “due in 60 days” is a lot clearer and easier to understand than “net 60 days.”

Short terms and the payment policy

Clients will always prefer longer payment terms, but as a business, you also have to think about your cash flow and needs. Negotiating shorter terms like about 15 to 30 days is advisable. 

Optimal payment terms

Net 7: payment is due in 7 days from the date invoice was sent

Net 10: payment due in 10 days from the date invoice was sent

Net 30: payment due in 30 days from the date invoice was sent

Net 60: payment due in 60 days from the date invoice was sent

COD: cash on delivery

CIA: cash in advance

PIA: payment in advance

1% 10 Net 30: if payment is received within 10 days, the customer is eligible for a 1% discount. Full payment is required after 10 days and the overall due date after 30 days since the invoice was sent. 

Contra Payment: offset payment from customer due to supplies purchased from that same client

Multiple payment options

Digital banking is one of the most convenient ways to have your clients pay you so make sure that this is an option for them. EFT (Electronic Fund Transfer) and Debit/Credit Payment are easier, safer, and quicker. 

Send out invoices immediately

The faster you send out the invoice, the earlier the client will know. This helps ensure immediate or earlier payment.

Know your clients

Knowing each of your clients is knowing how to communicate with them effectively. There will be clients that will need more explanation and clearer instructions.

Following up is key

A friendly reminder is not rude, especially if you haven’t heard anything from your client for a while and their due date is approaching. Plus, some people just really forget! They will end up appreciating a reminder here and there.

Payment incentives

Financial incentives are another way to encourage your clients to pay on time. The earlier they pay, the bigger the incentive. Here’s a guide:

Charge delayed fees

To ensure timely payment, include late fees in your terms. It can either be at a flat rate or in increments, depending on how late the payment. Personally, the latter will most likely encourage early payments more.

Payment terms stringency

Waivers here and there should be fine, but if you always adjust and allow the clients to pay late, they will be more complacent as time goes. This is not a good practice as it can hurt your cash flow. 

Lump-sum pre-payment

This is applicable for bulk orders wherein you may ask for a deposit before the services or the products are given. The client should also promise to pay the remaining bill at a certain time. 

Sample invoice template

Subject Line: Your Business’s Name: Invoice #001

 

Dear Client’s Name,

 

I hope you’re doing well.

I wanted to let you know a new invoice #001 has been created on your account. You can find the invoice attached to this email. Please pay the balance of $500 by December 31, 2018.

 

You can pay by mailing a check to:

 

Your Business Name

Your Full Business Address

Your Zip Code

 

Thank you for your business; I look forward to working with you again soon.

 

Kind Regards,

Your Name

Your Contact Details

 

Follow up on unpaid invoice template

Subject Line: Your Business’s Name: Invoice #001

 

Dear Client’s Name,

I hope you’re doing well. I’m contacting you in regard to invoice #001. This is a friendly reminder that the payment was due on December 31, 2018. Please send payment as soon as possible.

 

You can pay by mailing a check to:

 

Your Business Name

Your Full Business Address

Your Zip Code

 

I look forward to hearing from you. Please contact me if you have any questions.

 

Kind Regards,

Your Name

Your Contact Details

 

Aggressive follow-up template

Email Subject: Invoice #1035 is 30 Days Overdue

 

Hi [Customer Name]

 

This is a reminder that payment for #1035 has not yet been received. Per my invoice terms, a late charge may be applied on payments received more than 30 days after its due date.

Again, please feel free to reach out if you have any questions. Otherwise, please plan to settle this invoice immediately.

 

Thank you,

[Your Name]

[Invoice information with date of job completion, services, cost, the due date for payment]

 

Conclusion

We hope you learned a thing or two on what you can do to encourage your clients to pay on time. Professional invoices can definitely help you do so with some tricks here and there. Chasing down clients can be a painful task, so make sure that a bad invoice is no longer in the equation. Good luck!