Small-scale businesses face the most deteriorate issues when it comes to keeping up with invoicing, especially, if it’s just on the verge of beginning. Late invoices can lead these businesses into cash flow trouble and simultaneously keep the future profit margin hanging at the bay. However, if played a little smarter, all these payment fuzz could be avoided. Take a look at the following 3 strategies that can get you paid on time.

Follow-up Payment Procedures:

It is a sad fact for most of India’s small businesses as clients do not pay on time. A report from the International Finance Corporation revealed that more than 60% of SMBs have to wait over 2 Months to get paid. This clearly is an unhealthy gap of payment and this absence, of course, affect these small corporations adversely. You can avoid this cash crunch by implementing robust steps to deal with late payments. Initially, you will have decided upon a time when you would like to begin the follow-up action for late payments. In general, you should keep it just after the invoice/payment is past due. In the next step, you should be fixing the way to contact your debtors for e.g, via letter, email, phone or all of them. Consider also sending a monthly account statement in detail with the list of pending invoices and amount owed, so your debtors have a clear picture of how much they need to pay.

For an easier approach, you can have templates ready for follow-up and a script for calls to make sure that the recovery process is getting effectively handled. If you have run out of the option to proceed further in collecting the payment then as a last resort you could also opt for a debt collection agency which can help you to get your money back via legal actions.

Change In Payment Terms:

This is one more way to keep your business cash flow intact. Revising your payment terms with the peculiar instruction of when and how you would want to pay your clients in order to secure your income. Most of the businesses set due dates for 30 days, which seems to be quite more than enough time, however, you should reconsider it if you want your invoices to get clear from the pending list. Certainly, a business strategy is to offer a discount to clients to encourage them for paying on time and on the contrary, charge them with late fees if they fail to make a payment on time. Well, one can definitely invest in doing some research and find out about what payment terms the other companies are offering to remain healthily in the competition.

Automation:

Small business owners have often got a lot more on their plate for the initial few years. In such instances, it is always suggestive to automate the entire invoicing process for efficient working. Nowadays, businesses can directly opt for invoicing services by adopting ready-made software which can perform and excel all invoicing related tasks rather than to build such tools which are neither cost-effective nor time-saving. One should opt for services that are affordable and have features & functionalities that could propel your business by getting you paid faster.

In a Nutshell:

Moon Invoice can be an integral part of your business with not much hassle. Quickly generate recurring invoices, easily view and send account statements, offers multiple currencies & payment methods, track your expenses, print activity log and reports and many more to keep your business not only up to date with your clients’ payment but also to ease your all the daily invoicing tasks.

Moon Invoice can be an integral part of your business with not much hassle. Try Now! Click here to download the Moon Invoice app for Mac OS, iOS, Android, and Windows.

Recurring Payments Vs Recurring Invoices

Recurring Payments	Recurring Invoices
Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved.	Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves.
A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this.	A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies.

Pros and Cons of Recurring Invoices

Pros	Cons
You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered.	You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created.
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly.	It could be difficult to cope with recurring invoices if a transaction fails for any reason.

Net 45	Invoice is due in full within 45 days with no early payment discount offered
2/10 net 45 terms	2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/15 net 45 terms	1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days
1/10 net 45 terms	1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/7 net 45 terms	1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days

Category	Net Method vs. Gross Method	Explanation
Calculation Approach	- Applies tax credits first; reduces taxable income before computing tax liability.	- Doesn't apply tax credits; computes taxable income without considering tax credits.
Tax Credit Eligibility	- Allows for greater likelihood of tax credit eligibility due to reduced taxable income.	- Limits tax credit eligibility because taxable income hasn't been reduced yet.
Itemized Deduction Requirement	- Lowers threshold requirement for itemizing deductions due to decreased taxable income.	- Raises threshold requirement for itemizing deductions due to higher taxable income.
Advantages	- Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits.	- Results in higher taxable income compared to net method.
Disadvantages	- May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits.	- Increases taxable income and may result in higher overall tax bill.