Four steps to getting your invoices paid faster

Betaalme.nu (‘Pay Me Now’) is a not-for-profit initiative that aims to ease SME suppliers’ access to liquidity and seeks to unlock EUR 2.5 billion in liquidity for Dutch SMEs in the next five years. Its goal is to mobilise 50% of the top 1,000 corporates to offer their suppliers the opportunity of faster payment, or fast and reasonably-priced financing, of their invoices. Betaalme.nu also works with SMEs on educating them about the crucial importance of submitting their invoices correctly and promptly. The Paypers spoke to Betaalme.nu about the right steps for businesses to get their invoices paid faster.

As the owner of a small or medium-sized business, invoices you’ve sent out that have been left unpaid for a long period of time can be a major source of irritation. Yet, as an SME owner, you don’t have to just sit around waiting for your situation to improve. Here are four steps you can take to get your invoices paid faster.

1. Invoice in time

Businesses that invoice late can only blame themselves for any payment delays further down the line. Invoicing is too important for the continuity of your business to leave it as the last item on your to-do list. Make sure that invoicing is both a permanent and prominent part of your operating processes. Incorporate invoicing into project plans by default or set aside fixed days in your schedule for the job. Take into account your client’s own payment schedule, and send your invoices before their deadlines and not just after.

2. Be precise

When starting a new job or accepting a new order, make sure you have clear and documented agreements with your client for items such as terms and conditions and payment. Invoicing disputes can take up a lot of time and energy and subsequently delay payment. Hence, be precise when invoicing. This allows you to avoid payments being delayed because of inaccuracies. Contact your client if something isnt clear when you’re drafting their invoice. If you don’t, you’re simply sending your invoice and hoping for the best, which means you’re also taking the risk of something going awry.

What’s more, check that the invoice includes all the information your client needs to be able to process and pay accordingly. Your invoice should clearly state who has sent it, what goods or services need to be paid for and to whom it is addressed. Invoices should also include legally required information such as your company’s VAT number, the VAT amount, and the invoice number and invoice date. For international business, there may be additional requirements for invoices. For instance, invoices to clients that submit tax returns in other EU countries should state your VAT number as well as your client’s. To read about other requirements, click here (Dutch version).

Besides the legally required information, many clients, especially corporates, also require other details to be able to process invoices: a purchase order number, a department number or details of who authorised the order, etc.

3. Digital invoicing

Changing to a digital invoicing system can cover many of the above-mentioned issues. And by digital, we don’t mean emailing your invoices in a Word or PDF format. Digital invoices are created using special software, available in different versions. For example, there are systems that combine client management, log hours and invoicing. Some systems can be linked to external systems (e.g. your bank account) or your client’s system. Some corporates even have systems that allow suppliers to log in and submit their own invoices.

With a dedicated system, there are fewer risks for mistakes or inaccuracies on the invoice because it “asks” for all the information required, and usually also indicates anomalies.

4. Discuss payment terms with your client

Take the initiative to discuss payment terms with your client and ask for early payment. This could lead to different results, of course. One client may say they’re more than willing to pay earlier, while another may want something in return. Negotiations are, thus, key. Interestingly, many corporates have special financial schemes for their suppliers, but some only offer these schemes when their suppliers ask for them. It’s also worth bearing bear in mind that although clients may not have these schemes in place, they may consider them if someone asks for them. After all, a strong and financial healthy supply chain is important for both suppliers and for all corporate buyers.

About Joost van den Hondel:

Joost van den Hondel has been working in the financial services industry for more than 18 years. He was a senior management consultant in the financial services practice at Ernst & Young and Capgemini. At ING he started a joint venture for new business and was sales manager for e-invoicing solutions and senior manager credit management and credit insurances. He is the initiator and program manager for Betaalme.nu (Pay Me Now), which is supported by the Dutch government.