In a perfect world, invoices could be paid as early as they are received. This would result in healthy cash flows for most businesses, not to mention the opportunity to expand operations and achieve higher growth as a business. Unfortunately, getting invoices paid late is close to the norm for most businesses that haven’t streamlined their payment procedures.
In fact, late invoice payments end up affecting the ability of most businesses to expand. Up to 20% of affected companies confirmed that they would have channeled the cash into marketing, according to an article in The Entrepreneur. One issue that can lead to late payments is clients having invoice disputes. As long as you can eliminate these disputes, the chances are that invoices will be paid early.
Here’s a guide to eliminating invoicing disputes:
Identify Whose Fault It Is
Most businesses only learn about invoice issues long after the invoices are past the due date. Late invoices mostly arise for two reasons. Either you did something wrong that led to payment delays or the customer did something wrong. If the cause of late payment is the former, then there is a lot you can do to change that.
For instance, working with predesigned invoice templates could help you eliminate the chances of omitting key information in your invoice. If the fault lies with the client, looking for ways to eliminate this risk is a step in the right direction.
Clarify Invoice Terms
In most cases, a client will take too long to pay an invoice because they are struggling to understand it. Clarifying every term of your invoice on time could draw the line between receiving invoices early and late. For instance, ensuring that you include terms such as net 30 in your invoices lets clients know that the invoices are expected to be paid within 30 days.
However, clarification doesn’t end here. Call clients a few days after sending out an invoice to ensure that they understood every word on it. As the payment deadline nears, sending email reminders to the client can help solve any issues.
Make Record-Keeping a Priority
It is common for businesses that deal with diverse clients to lose count of their individual customer conversations and documentation. Although this might seem harmless on the surface, it can affect your cash flows where more than one customer wants to dispute invoices. Searching for specific information for a single client in disorganized records can be like searching for a needle in a haystack.
Organize client information, conversations, and past invoices such that you can easily retrieve vital information to help solve a dispute, as noted by a small business article. This, together with clarifying your invoice details, can help you leave no room for loopholes in your invoicing process.
Be Firm but Flexible When Dealing With Disputes
The main aim when disputing invoice claims is to preserve your relationship with your clients but not win against them in the conflict. When a client raises a dispute, be calm instead of defensive. Look into the facts and documentation to identify where the fault lies.
If the fault is on their side, take some time to explain this to them while being strict about your business policies. On the other hand, accept and apologize for any flaw in the invoice that was caused by you. You can also offer discounts on current or future projects as a form of apology.
A dispute is only solved as long as both you and your client come out of it smiling. As a reward, your cash flows remain healthy as you safeguard your working capital. Consider the above options to protect your business and build strong customer relationships.
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