This week Xero released it’s Invoice Reminders functionality.
Invoice reminders gives you the basic ability to remind customers about the invoices you’ve sent them, that they haven’t paid yet. This seemingly small and low-key feature highlights the importance of consistent debtor chasing for all small businesses. In a climate where cash is still King it’s well worth looking at this feature.
Here’s a list of 6 other things you can do to minimise the risks of late payments:
- Have a consistent approach to credit control – that’s the fancy name for collecting what’s owed to your business. If you keep your receipts reconciled and up to date, you can set Invoice Reminders in Xero, to automatically go out to customers – but beware – if you automate this and you don’t keep the accounts up to date you may send a payment prompt to a customer who’s paid you.
- Be clear and transparent at the beginning of a business agreement so both parties fully understand the payment terms. If your business operations would benefit from a Ts&Cs document, create one and send it to your customers, so it’s clear what’s expected.
- Look at alternative payment methods to avoid late payments like having on-line invoices with a PAY NOW button on them. You can sign up to payment gateways like PayPal or GoCardless. They do charge a fee but you can factor that into your prices, or consider it’s a much lower fee to pay than you having to spend hours chasing the money.
- Always print your bank account details on your invoices so the customer has the details to hand.
- Encourage customer to pay by direct debit or offer an incentive to pay early.
- If you have stubborn late payers, you could introduce a charge for late payments – but this is best documented in your Ts&Cs
For more complex debtor management tools – or if you have a larger volume of late payers you need to regain control of – you can check out the Xero Add On market place to find software that can automate the debt collection process for you, saving time and thought, as it means your business will have a firm and consistent approach to debt chasing. Chaser, in particular, adds the human touch to debt collection, and offers a free 90 day trial. This software has a polite and persistent email chase approach, but with a UK human voice tone to it. When we trialled Chaser we found it to be very effective and there’s a much smaller chance you’ll upset those repeat customers, that you want to pay you, and you want to keep!
What You Can Do With Xero’s Invoice Reminders
You can set a track of up to five different reminder emails.
You can set these different reminders to go out at a set number of days by reference to a given invoice’s due date.
You can switch off reminders for particular customers or invoices that you don’t want to receive a reminder.
On the appointed day by reference to due date, a reminder about each outstanding invoice will be sent out to your customer from a Xero Robot address – email@example.com between 4am and 8am in your timezone.
You can set an email address of your choosing for replies to those reminders to be sent to.
Invoice Reminders is a simple, chasing tool built into Xero. It may well be all you need to keep on top of prompt payment, and if you need more – you know where to look.