Consider your clients Bill Pay process when sending invoices

Bill Pay and Accounts Payable are usually the most disorganized part of any small business’s finances. It’s the last piece of the financial puzzle that businesses work on. And, there’s rarely a legit process other than just throwing expenses on the business card. Even when there isss a process, it isn’t great. Unless you’re regularly dealing with large businesses, your clients probablyyy don’t have an SOP or organized bill pay procedure. They’re just winging it and hoping nothing slips between the cracks.

That’s the environment you’re sending your invoices into. You’re sending them into a mess. Understanding that and anticipating your clients’ rudimentary Bill Pay process (or complete lack thereof) can teach you a lot about sending better invoices that get paid faster, why your clients might be late, and the importance of follow-up. Put yourself in your clients’ shoes, think about how they may be managing your invoices, and figure out how to avoid those bottlenecks and problems.

Client size impacts the payment bottlenecks :

You’ll never get a good look into your clients’ Bill Pay process or finances. But, you can usually guess what’s happening behind the scenes. If they’re under 20 employees, they probably don’t have any sort of dedicated process and the owner pays for everything themself. Between 20 to 50 employees, they might have a point person (like an operations manager or entry-level bookkeeper) that handles it in whichever home-brewed system works best for them. And, above that, they might hire the kinda outsourced accounting team or in-house controller that puts Bill Pay best practices in place with approvals and software. Each one of those has a different typical bottleneck while paying invoices to anticipate and steer clear of.

Don’t expect same day payments :

Net30 payment terms are entirely too long. But, ‘due on receipt’ is unrealistic. Your clients need time to receive, review, process, move funds, get approval, and send payments. Sometimes, that’s as simple as entering credit card info. Other times, that could mean getting approval from their boss and making sure there’s enough cash in the bank. And, the larger your invoice, the more time that process is going to take. Either give clients Net7 terms or don’t stress about a ‘due on receipt’ invoice being paid a few days late. All your reports will say a ‘due on receipt’ invoice is late. And, technically it is, but pragmatically it isn’t.

Always follow up:

Unless it’s for something absolutely critical, paying bills is a low-priority task. Your clients are distracted by client work, family time, and all the same stress you are. And, it’s very easy for your invoice to slip between the cracks. Automate all your basic, email follow-up to keep your invoices in mind and get them paid. Just about every basic invoicing software has follow-up customization options buried in the settings, from what the emails say to when they remind clients to pay. But, you may have to schedule more advanced follow-up yourself (for example, if you invoice on Thursdays but know a specific client pays bills on Wednesdays, schedule an email reminder from your normal CRM/email client for Wednesday morning).

Take payments out of their hands :

Dealing with your clients’ Bill Pay process and watching invoices slip between the cracks is always a pain. Include a direct debit authorization with your contracts and start auto-debiting recurring engagements (including those with milestones or evergreen retainers). Your clients can’t forget to pay your invoice when it’s automatically debited from their account. But, you’ll still need to send a warning invoice a few days before the withdrawal (especiallyyy if you’re debiting from a bank account. Just because you have the account info doesn’t mean there’s enough funds in there to cover it and dealing with a bounced payment will be much more annoying than normal follow-up).

Action Item:

Set up automatic follow-up in your invoicing software.