How to Get Your Invoice Paid Faster

Last Updated on June 23, 2023

For many companies, accounts receivable collection can at best be described as a chore and at worst as an anxiety-inducing experience where one large delinquent customer can put their own business in jeopardy.

altLINE, through offering invoice factoring and AR financing, has a wealth of experience optimizing accounts receivable collection and in turn cash conversion for our customers. As such, we quizzed our own accounts receivable collection team to garner some advice for business owners looking to get invoices paid faster. Here’s what they had to say.

How to Get Your Invoices Paid Faster

Get in the Habit of Dedicating Time to Payment Collection

All too often, business owners ship products or provide the service and hope for the best. Like developing any other healthy habit, it’s necessary to block off time either every day or week solely dedicated to collection, so that it becomes second nature. Consistent, respectful, and friendly communication is key to ensuring a strong working relationship with your customer’s payable department.

Invoice Accuracy is Everything

Check, double-check, and confirm invoice accuracy. Make sure payment terms, remit to addresses, and invoice destinations are correct. Maintain a system that ensures your invoice and payment doesn’t get lost. In A/R collection, time is truly money so don’t cause the delay with an invoice error.

Manage Expectations and Train Your Customers

Be consistent with your customers. Calling haphazardly and collecting aggressively based on your own cash needs will only cause confusion and strain. Companies like to buy from suppliers that make them easy to buy from. By sticking to your contract and internal process, your customer will be better prepared and willing to remit payment on time and with less effort.

Be Persistent, But Patient with Your Customers

Collecting payment can at times be difficult no matter how solid your process. Your customers likely have other vendors, their own delinquent customers, and their own cash balance to work with – smiling, maintaining a positive attitude, and listening goes a long way in facilitating payment.

Communicate With Your Customer Promptly

It’s easy to ignore and hope for the best when faced with delayed payments. While no one likes to face the likelihood of a write-off, the sooner you communicate concerns with a delinquent customer, the sooner you will resolve the issue. Don’t let a bad customer put you out of business, monitor all your customers’ payment behaviors and be prepared to respond to any negative trends. If long payment cycles or accounts receivable collection remains a challenge for your business, you might be a good candidate for altLINE’s invoice factoring or AR financing program. Contact us today and we’ll fill you in on how we help businesses accelerate payment and improve their financial health.

Other Ways to Accelerate Invoice Payment

Offer Automated Payment

Automation can help your business stay on top of invoicing your customers, while decreasing the amount of time your team spends on collection. Using automation tools like Quickbooks, you can set up automatic invoicing, reminders, fees and more. These tools are affordable and supported by 24/7 tech support.

Send Payment Reminders

Invoice reminders are critical. Everyone forgets things once in a while, and your customers are no different. Make sure your business sends consistent reminders, not only after a payment is late, but also leading up to the due date. These reminders should be polite and informative, ensuring your customer sees them as both important and helpful. Use our late payment email templates for some inspiration.

Reduce Your Payment Terms

If your business operates on Net 60 or Net 90 terms, and you’re struggling to keep cash on hand, consider reducing your payment terms to Net 15 or Net 30. This means the payment turnaround will be reduced, and you won’t be stuck waiting months for the cash to arrive. This can also keep your invoices more top-of-mind for your customers.

Charge Late Fees

Late fees are very common, and your business should leverage them if you have late-paying customers. These fees incentivize on-time payment and help ensure your customers meet their due dates. However, before charging late fees, make sure you’ve notified your customers up front of the financial risk involved in late payment.

Reward On-Time Payments

Have some good customers that always pay on time? Reward them! Offer them discounts or additional services that make them want to continue the behavior. Some businesses offer discounts for early payment – for example, offering 5% off the invoice face value if it is paid before the due date.

Have a Good Invoice Template

Your invoice template is important. Ensure that it’s branded, professional and easy to read. You want your customers to take your invoices seriously, but also fully understand the bill. You can find pre-built templates for free online, or you can leverage your invoice automation tool to create custom templates.

What If They Still Don’t Pay on Time?

If your customers continue to make late payments, in spite of all the actions you’ve taken above, it’s time to consider alternative forms of acquiring cash from your receivables. Here are two options:

1. Collections Service

A collections agency should not be your first line of defense against a late-paying customer. However, if you believe the invoice has gone delinquent, i.e., your customer doesn’t plan on paying, this is certainly an option. The collections agency will take a large percentage of the amount collected, but it’s better than not receiving any payment at all.

2. Invoice Factoring

Factoring is a form of alternative financing that converts your outstanding invoices into cash by selling them to a third party, or factoring company. For more information, read our complete guide to invoice factoring.