Could the right payment terms get you paid faster?
10/09/2019 / Comments 0
One of the most important interactions you have with your clients comes in the form of the invoice you send them. Getting it right is crucial.
For many businesses, the invoice they send their clients is based on a template they’ve been using for years, and only gets updated based on policies changing.
However, like with any form of customer communication, testing out different approaches could be key to achieving the best outcome.
We’ve already looked at what steps you need to take to invoice like a pro, and now we’re going to go one step further by looking at the specific language, terms and tone you should use to construct an invoice that gets you paid on time, every time.
The key thing to bear in mind when considering the language that you use in your invoice is that even if something seems clear to you and your team, it may not be clear to your clients.
All too often internal abbreviations and colloquialisms become second nature, and even if the terms you are using are common industry jargon, they may be misinterpreted by clients with less experience in finance and invoicing.
For example, a survey by Freshbooks found that stating payment was due within “21 days” had better results than using the term “net 30”.
It’s also important to make sure that your terms cannot be misinterpreted. Although it may seem obvious, simply stating “upon receipt” or “within x days of receipt” may not be clear enough.
Your client could take this as meaning upon receipt of goods/services or on receipt of the invoice, and it could leave you vulnerable to excuses such as “we didn’t receive the invoice until this date” if the payment becomes overdue.
Along with writing them in a clear way, consider amending the terms you do offer. Although there will be some restrictions on how much you can change your terms, even making a small change can have a big impact.
If you do have the freedom to test different payment lengths, you could find that a different approach works better for your clients. If you’re looking for a different way of setting out payment lengths, you could try requesting payment before the end of the month or by the 21st of the following month.
Another area you may want to revisit in your invoice terms is your policy on late payment and charging interest. Some companies avoid taking a direct approach here, as they are worried about the impact on their relationship with their clients.
However, setting out some clear penalties at this stage can make the conversation much easier down the line if there are issues with the payment. The key here is to avoid making your terms sound like a threat, but use them as a chance to show that you operate in a professional way and expect your clients to do the same.
When it comes to invoices, there are two main boxes you need to check with your tone; polite and professional.
You are conveying important information, so it is not the time for chatty or witty expressions that may make your invoice be taken less seriously. Keep the information relevant but detailed enough that the client won’t have to ask for clarification.
Include the words ‘please’ and ‘thank you’ in your invoice. It may seem trivial, but research has shown that the use of these words can increase the percentage of invoices paid by more than 5%. It will also go a long way in how your client feels about your brand when you maintain a polite tone throughout all your communication.
Are you confident your invoices are hitting the right mark, but still struggling with clients who won’t pay? Contact us today on 0800 9774848 or firstname.lastname@example.org to see how we can help.