Invoices That Work For Your Wholesale Business
By Sarah Pearson Published: 02/04/2009
If someone purchases a large order from your wholesale business, but does not pay you promptly for it, then the sale does you and your business no good whatsoever. Your money sitting in someone else's bank account isn't really your money at all. If you find that you are getting a lot of late payments (or worse, no payments at all), then perhaps it is time to restructure your invoicing strategy in order to make sure the invoices you send encourage your buyers to pay promptly.
Invoices that work are invoices that encourage action. A common label on an invoice is “payable upon receipt,” but that is not exactly a statement that encourages action on your buyer's behalf when you look at it a little more closely. Sure, “payable upon receipt” technically means that you should pay it when you get it, but your buyers may get a different impression from that statement. Some people view it more like a “pay this whenever it is convenient for you” suggestion than a “pay this right now” directive.
Instead, use invoices that encourage prompt payment by being direct and specific. Each and every invoice you send out should clearly announce a specific due date for payment, like “Due on March 21st, 2009,” NOT “payable upon receipt” or “due in 30 days.” The specific due date might really be 30 days from now, but 30 days sounds like a long time and the buyer may just file your invoice away for later, thinking they have a lot of time, and promptly forget about it rather than promptly paying it. A specific date means your buyer is more likely to pay attention to it, and it also eliminates any possibility of misunderstandings or reinterpretations on the buyer's part as to when the payment is actually due.
Another way to encourage prompt payment is to offer the buyer an incentive to do so. Many businesses offer a small discount to people that pay within a certain time frame – say, 2% off if the bill is paid within 10 days – to great effect. This doesn't harm your bottom line very much (certainly not more than a complete non-payment would).
Don't let your invoices be the cause of cash flow problems for your small business, particularly during these trying economic times. Take steps to make sure your invoices send a clear, strong message, and your cash flow will be protected.
