How To Get Paid on Time: 10 Invoicing Tips for Retailers

Get invoices paid | Shopify Retail blog

As a retailer, you know the importance of not only getting paid but getting paid on time. Late payments and unpaid balances on invoices can create serious disruptions to your cash flow and other business issues.

But are you doing all that you can to ensure that your invoices get paid on time? While you can’t completely control when vendors and clients pay you, you can take measures to ensure you’re paid within a reasonable time period. Strategies like using an online invoice tool that connects with your point-of-sale system, setting clear expectations about payment terms, and making sure your invoice template includes necessary information are just a few ways to accomplish this.

Here, we’ll outline these and several other tips to help you create invoices that work for you and your customers.

1. Use an Online Invoice Platform that Integrates Well With Your POS and Online Store

When it comes to creating invoices, automation is key. The more easily you can connect all your systems, the easier it will be for your customers to pay up and for you to keep your records up-to-date.

Most popular accounting tools, like Quickbooks and Xero, offer apps and plugins that you can use to sync their tool with Shopify. Their tools also include more general invoicing features that enable you to create online invoices using pre-made invoice templates, sync payments with your bookkeeping records, facilitate payment via various methods, and allow you to keep track of any overdue payments or unpaid balances.

There are also a number of third-party options which are designed to integrate with your selling platform. Some of the top options that integrate well with Shopify integrations include:

2. Incentivize Early or On-Time Payments

You can encourage your customers to make an early payment (or to simply pay on time) by creating an incentive to do so. Discounts, or credits toward their next invoice, can make a real difference in encouraging early payment.

For example, if your payment terms are net 30 days, you could offer a 5% discount if you receive payment within 10 days.

Depending on the product, you can also offer pre-order or early bird terms for those who pay in full upfront. You may also want to consider requiring upfront payment in general, if possible.

3. Penalize Late Payments

In addition to incentivizing early payment, you can also implement penalties for late payments. Standard terms are to charge an additional amount (typically a percentage of the balance, although you can also simply charge a set fee like $25) after a certain amount of time has passed (30 or 60 days overdue is a common cutoff).

You can also lay out additional consequences for late payments, such as passing the account to a collections agency after a certain amount of time. Make sure, if you do state consequences, that you are prepared to follow through if needed.

Be aware that clients who are habitual late payers or who are potentially defaulting on a payment may simply ignore such penalties in the hopes that you will give up and go away. You can, however, also leverage the penalty to incentivize settling an outstanding invoice. You can offer to forgive the late fee upon payment of the outstanding balance.

If the relationship is an ongoing one, you might choose to hold work or stop providing your product or service until the account balance is settled. And sometimes if emails are being ignored, you may find it works well to give the customer a call. Make sure to stay polite and approach the situation from a position of “How can we make it easier for you to settle your account.” Offering customers options such as a payment plan can be more successful than starting out by playing hardball.

No one likes chasing up late payments, but you can also get help in following up with overdue invoices. Send automated reminder emails via your invoicing software or ask your accountant (if you have one) if they would be willing to call overdue clients for you.

4. Make Payments Easy

The easier you make it to send a payment, the more likely you are to receive your payment promptly. Sometimes customers simply forget to pay an invoice because there is an additional step required and they set it aside to do later. The more options you can offer for easy, quick payment, the faster you can get paid.

There are a wide variety of options for accepting payment, including:

  • Direct deposit
  • Electronic transfers
  • Paypal (just note the fees so you can accommodate that in your payment terms)
  • Checks
  • Credit cards through an accounting tool like Wave or FreshBooks
  • Third-party payment platforms like Shopify Payments

Make sure you know ahead of time how your customer prefers to pay in order to provide them with the easiest option.

5. Implement Recurring Invoicing

In the spirit of making it easy, if the invoice is for a recurring order or service, you may want to implement “recurring invoicing.” This is an automated approach to sending invoices where you can automatically send a monthly invoice so you don’t have to do it manually each time. That’s one less task cluttering up your to-do list and a promptly sent invoice increases the chances of a prompt payment.

Some tools for recurring invoicing will also allow the customer to set their payment method and then automatically deduct or charge that amount each month, so you don’t have to make a manual payment each time.

6. Set Clear Expectations and Formalize Payment Terms

Ensure that you set clear expectations and formal terms around payment at the outset of any agreement or product order. Invoice payment terms should outline how you wish to accept payment, and can include things like:

  • Accepted currencies (or the currency they should pay with, if you only accept one)
  • Payment method options (for example, that you accept all major credit cards, or how they can access your bank transfer details for direct deposit)
  • Any penalties for late payments or incentives for early payments

Most importantly, you’ll want to set clear terms around the payment due date. You might have seen invoices which say ‘NET 30’ or ‘NET 60’. This means that the customer has 30 (or 60) days from the date on the invoice to settle the account before the invoice will be considered overdue.

These kinds of payment terms used to be the standard practice for businesses, but with the evolution of online banking and online credit card payments, this is changing. Now you will see more online invoices which state “due upon receipt.”

Make sure if your terms are “due on receipt” that this is explicitly stated in any contracts or written documentation around terms — otherwise the recipient may choose to disregard this in favor of their own preferred payment schedule.

7. Know Your Customer’s Pay Cycle

Invoices for retail | Shopify Retail blogFor larger customers, you may need to take their pay cycle into consideration. Some companies process all their payments for invoices on certain days of the month and may only process payments once or twice in a calendar month.

If this applies to you, make sure you know this information in advance so that you can plan your cash flow and invoicing schedule accordingly.

8. Customize Invoices to Include All Relevant Information for Each Customer

Most accounting tools will offer options for invoice templates, but you’ll want to make sure you still customize your online invoices to include the important details that each specific customer needs to process your payment.

All invoice templates will typically include:

  • A unique invoice number (so you can both keep clear records)
  • Your business name and address as well as contact information (this is a great opportunity to incorporate branding, like your logo and brand colors, to give your invoices a polished quality)
  • The customer’s name and address (and, if relevant, the name of the specific person — i.e. your point of contact — who is responsible for processing the invoice)
  • The issue date and payment due date (you will also want to include a note that says “due on receipt” or “NET 30” or whatever payment terms you have agreed)
  • An itemized list of purchased products, quantity, and price (you can also include a brief description)
  • An order number (depending on your inventory system, this will likely be separate from the invoice number)
  • Payment method (and bank transfer information if applicable)

You should also make sure you include any additional information for the specific customer. For example, do they need a specific project name or PO number to help them keep records of what the payment is for? Do they need a specific business address to make sure it goes to the right office? Do they need additional paperwork for tax purposes?

They may also request that you use a specific format or template to ensure standardization for their records. Failing to include required information can delay payment processing, and this can be even more aggravating if they also have restricted pay cycles and only pay invoices once a month. In a scenario like that, if you have to re-issue the invoice to include additional information, that could mean waiting significantly longer for the payment.

FURTHER READING: Need some extra help creating your invoice template? Learn more about creating the best invoice for your retail biz in our guide to invoices.

9. Clearly Itemize All Items So There Are No Mystery Charges

Another way to avoid delays and re-issuing of invoices is to ensure that all charges are clearly itemized and that you spell out each item purchased. For example, include the product name and description rather than simply an order or SKU number. This makes it easy for the customer to reconcile the invoice with their order history, and you won’t have to have a back-and-forth conversation to clarify what the items are or what the numbers mean.

10. Have the Right Point of Contact and Follow the Process

Different companies will have varying processes for paying invoices — especially if they’re a large company with a dedicated finance team. This can also mean that you’ll need to get invoices approved before they can be processed. In some cases, the approval comes via the accounting team; in other cases, you’ll have to get the approval from the company owner or the team member who placed the order and cc the finance team on the invoice email.

Some companies will have a series of steps required for approval or a specific platform they require you to use to submit your invoices. Make sure you understand who you need to send it to and how to submit it and then follow those instructions carefully to avoid unnecessary delays.

Moving Forward With Getting Your Invoices Paid

Whether you’re just starting out using a basic, free invoice template or implementing more advanced online invoice tools, the goal is simple: to make it easier for you to send invoices and easier for your customers to pay you.

What are some of your tips for getting paid on time? Share your thoughts in the comments.