How to reduce late payments in your business once and for all

How to reduce late payments in your business once and for all

How to get your invoice payments paid on time.

Learn how to tackle unpaid invoices effectively with our comprehensive guide.

Did you know that the average Nigerian business has to wait almost two weeks past the due date for an invoice to be paid? 

In most B2B transactions in Nigeria, there is always the possibility that certain clients will not pay their bills on time, and as a business owner..

Late payments and unpaid invoices can cause serious cash flow problems and lead to a strained relationship with your clients. In this article, we will explore some effective ways to eliminate unpaid invoices and strengthen your client relationships and visit some measures to ensure you get paid before the due date.


Understanding the Causes of Unpaid Invoices

Before we delve into the solutions for unpaid invoices, it’s important to understand what causes them. Here are some of the common reasons why businesses may fail to pay their invoices:

Poor communication with clients

If you’re not communicating regularly with your businesses, they may not have a clear understanding of what you’re invoicing them for. This could lead to confusion and misunderstandings. Establish smooth channels of communication and be available to answer any questions they may have about their invoice. 

Also, make sure you provide sufficient details about the services and products you've provided, so your buyers know exactly what they are being charged for...also send regular updates on the work you've done for them and ask about their progress.

Inaccurate or incomplete invoicing

If your invoices are inaccurate or incomplete, businesses may be confused or hesitant to pay. Double-check that all the necessary information, such as payment terms and billing address, is included in the invoice. If you’re using e-invoicing software to generate your invoices, ensure that the details are correct and up-to-date. 

You may also want to consider including a detailed breakdown of the services and products provided, along with their corresponding costs, to make it easier for buyers to understand what they’re paying for.

Lack of payment follow-up

As the saying goes, “The squeaky wheel gets the grease”. If you’re not following up with buyers who haven’t paid their invoices, they may not feel the urgency to do so. Establish a clear follow-up process and communicate it to your clients so they know what to expect. Use Bridger automated Invoice reminders to follow up, softly.

Consider automated payment reminders to make the process more efficient. In addition, you may want to consider offering incentives for early payment or penalties for late payment to encourage clients to pay on time.

Another common reason for unpaid invoices is financial difficulties on the part of the buyers. In some cases, buyers may be experiencing cash flow problems or other financial issues that prevent them from paying their invoices. In these situations, it’s important to approach the situation with empathy and understanding. Consider offering payment plans or alternative payment options to help the client meet their financial obligations.

It’s also important to ensure that your invoices are clear and easy to read. Use a simple, easy-to-read font and format the invoice in a way that makes it easy to understand. Avoid using jargon or technical language that may be confusing to clients. In addition, make sure that the invoice is well-organized and includes all the necessary information, such as the date of the invoice, the due date, and the total amount due.

Finally, it’s important to maintain a positive relationship with your clients. If you’re constantly hounding them for payment, it can put a strain on the relationship and may make it more difficult to do business in the future. Instead, focus on building a strong, positive relationship with your clients based on trust and mutual respect. This will help to ensure that they are more likely to pay their invoices on time and will continue to do business with you in the future.

How to Effectively Eliminate Unpaid Invoices

Implementing an Efficient Invoicing System

To reduce unpaid invoices, it’s essential to have an efficient invoicing system in place. Here are some tips to help you establish one:

Make use of the available software and the benefits of automation

Effective credit control rides a difficult line between being instrumental in ensuring prompt payment, and, therefore, adequate liquidity, and being time and effort intensive for already stretched resources.

This is where credit control software can be a lifesaver, by automating and streamlining many of the tasks that would traditionally fall to someone within the accounts department.

When choosing invoicing software, consider features like automatic payment reminders, customizable invoice templates, and integration with your accounting software. These features can save you time and make your invoicing process more efficient.

Overall, automating your credit control process can save you time and effort, while also freeing up resources within your business so that you can focus on other areas.

Of course, it’s important to choose the right software for your needs and to make sure that it integrates seamlessly with your existing systems.

Bridger does these for your business, so you can be sure of a smooth transition.

Use early payment discounts to get invoices paid faster

Early payment discounts are a great way to encourage customers to pay their invoices before the due date.

By offering a discount for early payment, you’re effectively giving your customers an incentive to pay their invoices sooner rather than later.

Of course, this won’t work in every case – some customers will still pay late, regardless of the discount.

But offering an early payment discount can be a helpful way to encourage prompt payment from the majority of your customers.

You could offer a small discount (eg: 0.25% or 2%) for payments made within seven days of the invoice date, or a larger discount (eg: 0.50% or even up to two percent) for payments made within three days of the invoice date.

While early payment discounts work well in isolation, they work particularly well when combined with late payment charges. In essence, you’re offering your customers a ‘rebate’ for paying on time, and a ‘penalty’ for paying late.

This sends a strong message that you expect to be paid promptly and there will be consequences if payment isn't received within a certain timeframe.

Establishing clear payment terms

Be clear about the terms of payment right from the start. Make sure you and your clients have clarity on when and how payment should be made. Offering incentives for early payment, or fees for late payment, can also encourage prompt payment.

Consider sending payment reminders a few days before payment is due to ensure that your clients don't forget. You can also send a follow-up email a few days after payment is due if you haven't received payment yet.

Additionally, consider offering payment plans for larger invoices. This can make it easier for your clients to pay and reduce the risk of unpaid invoices.

Give your customers the widest payment options

The best way to get paid is to make it as easy as possible for your customers to pay you. This means giving them multiple payment options and being flexible on when they can pay you.

If you only accept bank transfer payments, you're excluding a whole group of potential customers who may not have a bank account or who prefer to use other methods such as debit card or cheques. By offering multiple payment options, you'll increase your chances of getting paid on time.

Bridger payment portals offer a range of payment options, including bank transfer, credit card, and debit card. All your customer's payment details are collected together in one place, so you can keep track of who has paid and chase up any late payments.

Providing Excellent Customer Service

Deliver high-quality service and show your clients that their satisfaction is your top priority. Providing excellent customer service can help you build a loyal client base that is more likely to pay promptly and recommend your services to others. It is important to go above and beyond your client's expectations by providing personalized service, offering solutions to their problems, and being proactive in addressing their needs. This can be achieved by paying attention to the little details, such as providing a comfortable and welcoming environment for meetings and sending personalized thank-you notes.

Remember, happy clients are the key to a successful business.

Send your payment reminders in advance

Traditionally, payment reminders are sent after the payment is due. But you can increase your chances of getting paid on time by sending reminders in advance.

You can set up automatic payment reminders so your customers know when a payment is coming up and can plan accordingly. This way, they're less likely to forget to pay you and you'll be more likely to get paid on time.

Letting your customer know in advance that a payment is coming up will also give them time to get in touch with you if there are any issues with making the payment. This way, you can work out a solution before the payment is due and avoid any late payments.

Not only does advance warning let them get all their ducks in a row, but it helps prevent bill shock. Bill shock is when a customer is surprised by how much they owe, and it can often lead to them not paying the bill at all.

If you give your customers a heads-up about upcoming payments, they can budget for it and won't be caught off guard. This will help you get paid on time and avoid any late payments.

For maximum efficiency, you can also automate your payment reminders. This way, you can set it and forget it, and you'll never have to worry about late payments again.

With Bridger, you're able to set up advance payment notices in intervals such as 7, or 14 days before the invoice is due. This gives your customers a heads-up that their payment is due soon and they can budget for it accordingly.

Monitoring and Tracking Unpaid Invoices

Regularly monitoring and tracking outstanding invoices can help you identify patterns and trends in late payments. This can help you take proactive measures to avoid late payments and ensure a steady cash flow. Here are some tips to help you stay on top of the situation

Keeping accurate records of invoices

Tracking all your invoices from creation to payment is crucial to staying on top of overdue invoices and ensuring that no invoices are lost in the process. Consider automating your invoicing process to make tracking and record-keeping easier. This can save you time and reduce the risk of errors. You can also use invoicing software that can automatically send reminders to clients who have overdue payments.

It's also important to keep a record of all communication with clients regarding their outstanding invoices. This can help you keep track of promises made by clients and ensure that you have a clear understanding of the situation.

Regularly reviewing outstanding invoices

Setting a regular cadence for reviewing outstanding invoices can help you stay on top of overdue payments. It's important to follow up with clients who have overdue payments, but be firm but polite in your communications. Show that you are committed to resolving any issues that may be preventing payment. You can also offer payment plans or negotiate a payment schedule to help clients who are struggling to pay their invoices.

It's also important to keep in mind that some clients may be experiencing financial difficulties or other challenges that are preventing them from paying their invoices on time. In these cases, it's important to be understanding and work with the client to find a solution that works for both parties.

Identifying patterns and trends in late payments

Using your invoicing data to identify patterns and trends in late payments can help you take proactive measures to avoid late payments in the future. For example, if you notice a particular client or service tends to result in late payments, you can use that information to make changes to your invoicing or billing policies accordingly.

Another way to identify patterns and trends in late payments is to analyze the reasons why clients are not paying their invoices on time. This can help you identify common issues that are preventing payments, such as unclear invoicing or billing policies, disputes over services rendered, or financial difficulties. By addressing these issues, you can reduce the risk of late payments and ensure a steady cash flow.

In conclusion, monitoring and tracking unpaid invoices is an essential part of managing your business's finances. By keeping accurate records of invoices, regularly reviewing outstanding invoices, and identifying patterns and trends in late payments, you can take proactive measures to avoid late payments and ensure a stable cash flow for your business.

Get paid on time, every time

By making use of automated payment reminders, Invoice financing and debt recovery from Bridger, you can rest assured that you'll get paid on time, every time. This way, you can focus on running your business and leave the payment chasing to us.

If you're interested in trying out Bridger Africa for yourself, sign up for free today.

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