A/R Optimizer » Improve Invoicing Procedure

Establishing Terms

Terms and Conditions

Proactively setting clear billing and payment terms at the time of sale is critical to avoid future delinquencies and to assist in efficient collections. During the initial sale, determine what works best for the customer, including options such as:

• Payment installments

• Interest charges on overdue amounts

• Early payment discounts (if beneficial to the company)

Structuring flexible, clear terms early on creates mutual understanding and helps maintain cash flow.

Invoicing Best Practices

Shortening Timing of Invoices

Minimize any delay between providing a service and sending an invoice.
The goal: Issue invoices within 24 hours of service or delivery.

Example:
A client with receivables around 60 days old was delaying invoicing due to multiple internal approvals—most of which resulted in no changes. By streamlining approvals, they improved cash flow significantly.

Tip:
Avoid installment programs with large lag-times; these typically lead to lower recovery rates.

Billing Procedures

Effective billing must be supported by accurate, clear, and immediate processes. Always:

• Ensure invoices are accurate.

• Bill for all eligible services or products.

• Complete internal approvals quickly.

• State payment terms clearly on every invoice.

• Date invoices at the close of the service period.

Important:
Any internal mistakes or unclear communication may shift blame onto your company if disputes arise.

Maintenance of Billing Procedures

Strong maintenance practices protect your company’s credibility and cash flow:

• Double-check all billing for accuracy.

• Bill all items and services rendered.

• Meet all internal approval steps.

• Display payment terms clearly.

• Date invoices correctly.

Failure in maintenance could give customers grounds to delay or refuse payment.

Follow-Up Schedule

Proactive Client Contact Timeline

• 10 Days After Invoice Sent:
  Call to confirm the invoice was received and check for any issues.

• 29 Days After Invoice Sent:
  Make a second call to ensure the invoice is scheduled for payment.
  (Phrase your message carefully to avoid offending the client.)

• 45 Days After Invoice Sent:
  Notify a supervisor and have them follow up.
  (A supervisor’s involvement can add urgency.)

60+ Days After Invoice Sent:
Send a final notice.
If payment is still withheld or disputed, consider involving a third-party collection agency.