Every contractor strives to make running their business easier. The problem is that late payments frustrate every effort you make to improve service delivery as a contractor. One in five businesses reports that late payments continue to pose significant threats to entrepreneurs. Additionally, six out of nine sectors, including finance and banking, say that 24% of their payments arrive after the due date. On top of that, sending out manual payment reminders to customers is a tedious ordeal. Not only does it result in unnecessary delays, but the misplacement of such payment reminders by clients or losing the documents in the mail is also possible. There’s one clear solution: automate the payment reminder process.
Technology is enhancing operations in various sectors by increasing efficiency, and that is why you need to automate invoicing. By automating invoicing, you will have more time to focus on growing your operations. Why? Because you do not have to deal with pesky administrative activities of sending out manual invoices.
The Importance of Having a Payment Reminder Process
Contractors who use automatic payment reminders enjoy significant savings in terms of time and money. Also, automating invoicing can help you realize faster payments. Many contractors are struggling with late payments and unpaid invoices due to the lengthy wait time. That can become a thing of the past when you automate your payment process.
Ensuring your books are always up-to-date is the other advantage of using automatic payment reminders. The fact that you are always on the move as a contractor implies that managing your financial records can be a challenge in one way or another. Automation helps you to address this issue by using real-time financial records and reporting.
How Having Standard Payment Processes Saves Time
It is a fact that immediate customer response is part of your priorities as a contractor. That means that relying on mail reminders when it comes to invoicing is not an option because it forces you to wait for the responses you need for days or even weeks. Automation allows you to send payment reminders via email and text, which means your clients instantly receive their notice.
The bottom line here is that automation reduces wait time and results in a faster collection of funds. Here is some insight into how a standard, automated payment reminder process saves time:
1. It Improves Efficiency
When you send a payment reminder by mail, it can take days before a particular customer gets the letter. Losing such a document means that the recipient will receive it after several weeks, and that will ultimately affect your cash flow. Standard payment processes ensure that the payment reminders you send through email and text find their way to your customers immediately.
As a result, you will experience increased efficiency when it comes to getting paid for the services you render, and that, in turn, saves on time.
2. It Makes Payment Frictionless
There are several barriers to payment when you choose to mail payment reminders, and removing or minimizing them is nearly impossible. Automation facilitates electronic messaging on various platforms, including mobile phones. Your clients can self-serve at a convenient time without unnecessary interruption, and that can also reduce the time it takes to pay.
You can also schedule payment reminders to arrive before or after the due date, thanks to automation. That can also happen at a time when your customers are most probably checking their email, which will, in turn, streamline your entire payment procedure.
3. You Can Use Preferable Channels
Reaching your clients with the channels of communication they prefer is the other way you can access faster payments. For instance, some individuals prefer to receive payment reminders via text rather than email. The implication, in this case, is that sending such reminders to such persons through email can result in unnecessary payment delays.
Engaging your customers and using the communication channels they prefer for receiving payment reminders will play a significant role in saving time.
4. You Can Offer Provisions for Linking to Preferred Payment Methods
Providing your customers with only one payment option or one that is unreliable can cost you a lot in terms of time and resources. There are multiple payment platforms your clients can use, and some are more popular than others. The solution, in this case, is accepting payments from different payment options. Automation allows you to link to preferred payment options, thus cutting back the time you can expect to receive payments.
The Steps and Timeline of an Effective Payment Reminder Process
The ideal payment reminder procedure should lower your operating expenses, facilitate faster payments, improve cash flow, and reduce the number of debt collection calls. Here are steps to implementing an effective payment reminder process.
1. Send Payment Reminders Before the Due Date of an Invoice
Waiting until an invoice is due or after the due date to send a payment reminder is not prudent. The reason is that a specific client may receive an invoice, set it aside to pay later, and forget about it soon after that. Automation allows you to send payment reminders at intervals before the due date of a particular invoice.
That acts as a kind reminder to your customers that the payment deadline is approaching, and it feels less invasive as well.
2. Email or Text Payment Reminders When an Invoice Is Due
Reaching out to your customers when the due date of an invoice arrives is a wise idea. You can set your invoicing tool to accomplish this objective automatically. When you do so, the reminder informs a client that a payment is due, and they can click through and pay before the deadline hits.
3. Send Payment Reminders When an Invoice Is Overdue
Sometimes, late payments are inevitable even after taking the steps above. But chasing after overdue invoices is not the best use of your time. Sending electronic notifications regarding overdue invoices is an effective way of staying on top of unpaid invoices without investing valuable time in such an activity.
Also, setting up time reminders ensures that your customers receive payment notifications at specific intervals post-payment due date.
4. Manage Recurring Invoices
If you have clients who receive subscription services or have you on retainer, creating the same invoice from time to time is taxing, time-consuming, and may involve a lot of administrative activities. In that case, you should consider creating an invoice once for ongoing projects with the same payment period. After that, schedule the electronic invoice to go out at the appropriate period.
You can also generate unique invoice IDs to eliminate cases of duplication or confusion for recurring payments.
5. Deploy Automatic Payments for Recurring Invoices
Automating the actual payments of recurring invoices, as well as invoice generation and sending, is possible. This requires you to earn an extra level of trust from your customers. The reason is that such individuals need to allow you to automatically charge their credit card or bank account on an ongoing basis. But the advantage of this approach is that it saves both you and your clients valuable time.
You can deploy automatic payments with an email prompting your customers to enter their payment details for auto-pay. Otherwise, you can ask your clients to share their payment information with you over the phone. Then, you can enter it manually.
6. Schedule Invoices for Future Payments
You can schedule invoices to go out to a particular customer later if you are not ready to send the invoice after closing a deal. For example, when you book a project that will commence in the next three months, you can create an invoice now and schedule it to go out three months later. By doing so, you will be able to focus on the work rather than the pesky administration that comes with invoicing responsibilities.
7. Create Invoices With Google Forms
You can also automatic invoice generation with Google Drive. It’s possible to save a lot of time with these two methods:
- Google Sheets — If you want to automatically generate invoices after adding or updating a worksheet, spreadsheet, or row in the associated document, you can use Google Sheets.
- Google Forms — This option allows you to receive alerts to create an invoice when a user submits or edits a response.
Start Streamlining Payments — Automate the Payment Reminder Process
Automation can improve the way you run your operations. Start the transformation by using processes for electronic payment reminders. Additionally, reducing the time you spend on administrative functions gives you more time to focus on your services. That will ultimately enhance customer satisfaction. Adopting the steps above will help you maintain accurate financial records. It will strengthen your relationship with customers, too.
It is not possible to deliver top-notch services to your clients — let alone stand out from the competition as a contractor — if you do not streamline your operations. Automating the payment reminder process is one of the ways you can achieve this goal.