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Nowadays, there are numerous agencies that provide their services to clients. Good relationships are the key for both sides and the success of the projects. However, at the end of the day, agencies must get paid, in order to thrive further. Billing your clients oftentimes comes more difficult than it actually is or that it should be.
After all, agencies want to provide clients with convenience and avoid being too pushy about payments. That way, they ensure client satisfaction and long-term engagement. Nevertheless, late or missed payments will hurt your company and its cash flow. Invoices, for example, may allow clients to pay in anywhere between 30 to 120 days but during that time, your agency has expenses to pay, such as bills, taxes, salaries and many others.
Therefore, encouraging clients to pay is sometimes a must even if you have to be a bit persistent at times. Still, with the right strategy in place, you can get paid on time and avoid any inconveniences along the way. That being said, here are a few effective B2B invoicing strategies.
One of the important factors when billing clients is politeness. Whether you’re sending an invoice or a reminder, it’s still important to nudge clients nicely. Good manners play a vital role in client/agency relationships and it can ensure you get paid on time.
What’s more, it sets you apart from other competitors that aren’t so polite when it comes to getting paid. Therefore, implementing words, such as “please”, “thank you” and others in your invoices may work well for both sides. As a matter of fact, agencies that have manners when sending out invoices are 5% more likely to get paid on time.
Automate the process
Modern technology helps companies in numerous ways. It can also help agencies with their invoice and billing methods. Digitalizing your invoice billing and implementing automation can greatly improve invoice tracking and also greatly reduce the chances of human error. With electronic billing systems in place, clients can pay wherever they may be and whenever it suits them best.
On the other hand, agencies will, therefore, encourage clients to pay on time and also reduce the costs involved with paper billings, such as printing, postage and delivery time. As a matter of fact, automation can improve cost savings by 90% on accounts payable, improve cost savings by 44% on accounts receivable, reduce invoice errors by 37% and improve storage cost savings as well. Aside from cost benefits, automation can easily be integrated into any major financial system your company may have implemented.
Implement a billing solution
As mentioned before, missed or late payments can hurt your agency’s cash flow and financial stability. In addition, late invoice payments are quite common in the B2B sector. In fact, accounting firms are oftentimes faced with late or missed payments. That being said, nearly 30% of the accounts receivables owed to firms outside of the “Big Four” are more than 90 days past due. However, integrated solutions and proven strategies, such as fee financing for accountants can easily remedy the issues at hand.
The way it works is that agencies get paid in full and on time while the “silent middleman” allows clients to pay their invoices through monthly installments. In other words, various billing solutions can be implemented to still provide convenience to clients while agencies don’t have to suffer through a negative cash flow problem due to late payments or overdue invoices.
Plan your billing letter strategy
Agencies oftentimes have to send reminders to clients when the invoices are nearing their due time. This is especially true when the invoices become overdue. The key takeaway for agencies is to attempt to get paid on time while avoiding being too aggressive with clients about it.
It’s no secret that agencies handle difficult clients all the time. That means that sometimes you have to prepare yourself for the worst case scenario but only if it’s absolutely necessary. For instance,
- The first reminder letter should assume clients simply forgot to pay and you’re politely urging them to do so. As mentioned before, good manners are oftentimes crucial in this scenario.
- A second latter should voice concern that something must have gone wrong. You can provide payment alternatives to clients or offer to help them sort out problems with the payment. A bit of effort on your part may go a long way.
- Your third letter is about consequences. This is the last resort reminder in case your other letters haven’t made any progress. Inform clients that there’s a deadline until which they must pay or you will have to initiate your collection process. It’s important not to resort to this kind of urgency unless you’re certain that you’re dealing with a client who simply doesn’t want to pay.
In case nothing works, you can always consider alternatives or take a client to court if nothing else seems to work.
Invoices are a good way to collect payments from clients and offer them a convenient method of paying. However, as beneficial invoices may be, they might hurt your financial status if they’re long past due. In that case, implementing proven invoicing strategies may help you avoid any inconveniences or misunderstandings while helping your agency get paid on time.