Late payment of invoices is a perennial problem for accountants and other SMEs and the pandemic has not improved the situation. FinExtra has reported on the government announcement that exposes the extent of the problem. In Britain, many invoices are not paid before the 60-day limit, over £23 billion worth of payments are owed to businesses, and each year 50,000 businesses close because of late payments. The government is initiating a Prompt Payment Code to help tackle the problem, but there are things that you can do to get paid quicker. An electronic payment solution can help you deliver invoices quickly and securely, make it easier for clients to pay, ensure the payment is in your bank account instantly, and automatically reconcile the payment to your accounts.
Speed up your invoices
Some delays with payments occur early in the process. When paper invoices are sent out there is the chance they could get lost in the post or at least be claimed to be lost in the post and unless you’re going to start sending every invoice out by special delivery to be signed for, there’s no way you can prove otherwise. But even if it is delivered properly it is not always easy to know that the correct person has seen it and initiated payment. Sending a pdf or word invoice through email is faster than the traditional paper invoice, but is not more secure. Fraudsters target emails containing the words payment, invoice, bill, account details etc, and they are hacked into with the fraudster changing the account details on the invoice before sending it on to the intended recipient. When your loyal client pays, their payment goes to the scam artist instead of the intended payee – two parties out of pocket, two innocent victims. This type of scam is called Email Intercept Fraud and can harm your business and your clients. In one shocking example, a couple thought they were paying their solicitor, but instead ended up paying a fraudster £120,000. If that happens to one of your clients, not only will you not get the fees you’re owed, but I doubt you’d get repeat business from that client again. This type of fraud is a real game changer and has direct and indirect longer lasting consequences for your business and reputation.
To add security and speed to the process, it is helpful to initiate electronic invoicing or to use a payment service that allows you to send an invoice securely. These methods let you transmit the same information as a traditional paper invoice, but provide you and your client with added peace of mind. The client will know the request for payment is legitimate and you will know as soon as it is viewed and paid. In addition to the added speed and security, you will also save money on paper and postage.
Make it easy for your client
Another way to ensure that you are paid as quickly as possible is to make the process as easy as possible for your client. Electronic payment solutions allow your client to pay with just the click of a button instead of having to fill out a form, type in lots of details into their online or mobile banking or write a check. Digital payment apps make it easy for your client to pay because:
- Payments can be made from anywhere – digital payment solutions able a client to pay from their mobile or internet connected device meaning they don’t have to be at their desk to respond to your payment request.
- Data entry is a thing of the past - All the relevant information - amount, reference, and receiver’s bank account details – are pre-populated, so your client doesn’t have to enter any data.
- Mistakes are avoided – Because your client doesn’t have to enter any information they will avoid making transcription errors that can occur when paying traditional invoices.
Cut clearance times
Even if your client has paid, some forms of payment take longer to appear in your bank account than others. Once deposited in your account, cheque payments are available by the end of the next working day and some payment services, like PayPal, are even slower, taking 4-5 working days to clear. Opting for electronic payment solution enabled by Open Banking can cut your payment clearance wait to no time at all. As soon as the client makes the payment, the funds are in your account, cleared and available to be used.
Reconcile in a snap
Finally, switching to an electronic payment solution not only gets you paid quicker, but also saves you time if you choose a payment solution that works with your accounting software. Ordo is the official payments Open Banking partner with Sage and is available in the Sage marketplace. It also works with Xero and Quickbooks. Because Ordo works seamlessly with your software, it loads all your transactions into your accounts without any data entry from you. You save time and avoid making data entry mistakes. With Ordo, you can easily see who has seen your invoice, who has paid, and who hasn’t. Arrange a demonstration today and find out how Ordo can help you avoid late payments and save valuable time.
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Ordo removes hassle & headache from payments, making getting paid easy. Ordo means reduced costs, immediate money transfer, automatically reconciled payments, invoice security, and happy customers. We’re FCA authorised (FRN836070), invested in by Nationwide Building Society, the former Faster Payments leadership team & CGI partners.