Healthy cash-flow is key for businesses.
Improving your cash-flow could be as simple as changing the wording on your invoices. So whenever someone comes up with empirically-based, simple ways to get paid faster, business owners take note.
FreshBooks, the cloud-accounting company, is in possession of not only reams of real-world invoices for their customers but also plenty of hard numbers on exactly how quickly they were paid. So they sifted through this data to determine what helps to get paid quickly.
Be Polite. The first thing they noticed in the data is that being polite really matters! A simple "please pay your invoice within" or "thank you for your business" can increase the percentage of invoices that are paid by more than 5 percent! Not only that, but politeness clearly gets you paid faster.
Days to Pay. Using the word "days" as opposed to "net" gets you paid more often and faster. While the words "net 30" or similar may make sense to some business owners, perhaps that kind of wording is not as clear as it should be.
Dump "Upon Receipt." Most people seem to interpret "upon receipt" as "whenever you feel like it." It's as if they receive an invoice with the words "payable upon receipt" and immediately dump it into the "whenever" pile. Using specific terms such as "21 days" seems to focus the customer’s mind around a specific timeframe and will actually get you paid faster than asking for immediate payment.
These small edits clearly caused invoices to be paid faster according to FreshBooks's analysis.
One other change also affected when an invoice was paid but involves a trade-off. Declaring that interest will be charged on late payments, it seems, "gets you paid slower, but it also seems to ensure a higher percentage of invoices will get paid."
What exactly does all of this mean for your business?
According to Freshbooks, if getting paid quickly is most important to you, the company suggests adding this line, or something very similar, to your invoice: "Thank you; we really appreciate your business. Please send payment within 21 days of receiving this invoice." Polite and clear!