How To Better Negotiate The Client Invoicing Process

There are many business owners out there who are frustratingly lax with how they chase up invoices or communicate them before taking on contracts. That might not be because they’re poor businesspeople, as perhaps they have a too-big heart and sense of goodwill, operating on good faith and allowing people to pay when they feel like it, as opposed to when they should. But this isn’t how a business runs. Even if you run a charity, the financial planning has to be accounted for, and the revenue or income must flow correctly. If you believe you’ve had trouble negotiating the client invoicing process in the past (no matter the reason), then it’s always healthy to take another look at the habits you have in place. In this post, we intend to help you with that. Enjoy!

Have Strict Parameters & Policies Signposted Before Contract Agreement

Most payment issues stem from clients who simply don’t know what’s expected of them (or at least, that’s what they might say). To avoid such confusion, your payment terms should be spelled out in plain language and accepted in writing before any work begins.

You might consider creating a simple one-pager that outlines when invoices get sent, how long clients have to pay, and what happens if they don’t. This doesn’t need to sound threatening of course. A friendly reminder that “all invoices are due within 30 days” works better than legal threats to start the relationship.

You might find success with an initial conversation about money matters rather than just sending a document after you agree on the work to be done. Money talk feels awkward sometimes, but that five-minute chat could save weeks of frustration later on.

Develop A Clear, Gradual Escalation Process

Nobody wants to jump straight to threatening legal action over a late payment. Thankfully, a gentle nudge often does the trick, especially for clients who just forgot or got busy. Your escalation process could start with a friendly email reminder a few days after the due date.

If that doesn’t work, a phone call might be next. The friendly touch (note, without accusations at all) should help you fix the issues quickly as it’s harder to ignore a voice than an email. If you’re dealing with a repeatedly late payer, a more formal letter stating the consequences of non-payment can start to creep into your language, and that’s where you begin to gently remind, then enforce, even by asking if the bill is hard for them to address. It’s better than chasing someone with their head in the sand.

Put Incentives In Place

The truth is that carrots often work better than sticks, it’s just human psychology, and you don’t want someone avoiding you because that can just be frustrating. This is why you’ll see many businesses offering small discounts for early payment rather than just penalties for late ones. A 2-5% reduction for settling within ten days is a decent idea, and it could motivate clients to prioritize your invoice over others. Maybe it’s worth that discount cost to have the money supporting your cash flow now than later.

In some cases, you might agree milestone payments for longer projects. Breaking payments into smaller chunks makes them more manageable for clients and reduces your risk, such as if you’re doing a full household renovation and want to charge after the foundations have been put in place. The client might find it easier to pay three smaller invoices than one large one at the end also, so it could work out well. Just make sure they agree as opposed to having this as the default.

Use Appropriate Invoice Management Software

Of course, managing different invoices at different stages of delivery and with various clients of different conduct can be exhausting. This is where a more capable system such as Stampli’s invoice management can help you here, as software tools like this take all the busywork out of your paperwork. 

Depending on the package you use, they can track when invoices are viewed, send automatic reminders, and sometimes accept online payments to remove barriers. The good ones will also integrate with accounting software to give you a complete financial picture as you handle the rest of your business, after all there’s more to bookkeeping than chasing Mr. Bloggs who hasn’t paid yet.

With this advice, we hope you can feel more confident in navigating the client invoicing process. Sometimes, they don’t pay, but that doesn’t mean you won’t have recourse. Ultimately, heading to court will be necessary, but that’s thankfully rare given the consequences on behalf of the client.

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