Have you ever sat down at a restaurant and had the waiter deliver exactly what you wanted without you even asking for it? (If so, please drop us a note and let us know where this wonderful place is. We want to go there!) The odds of this magical event happening are approximately the same odds as you getting paid without sending out an invoice. So what are you waiting for?
The single biggest lever you have in getting paid quickly is invoicing quickly.
For a small business owner, cashflow to the business is vitally important. So while it might seem like simple advice, the sooner you send out an invoice the sooner you’ll get paid. Unfortunately, most companies miss the mark before they even get started because they don’t get their invoice out soon enough.
Make It A Priority
Take advice from this Forbes article: As soon as you finish work on a project, make invoicing for the work your highest priority. In a small business, work can pile up and things can slip through the cracks. You probably didn’t start a company in order to do billing, so it can be one of the first things to fall by the wayside. The best way to ensure you get paid on time every time, is to put invoicing at the top of your to-do list.
Take Advantage of the Recency Bias
The human brain tends to give greater importance to events that happened recently versus those that happened in the past. This is called the recency bias. So the faster you bill, the more importance your client is likely to assign to your work, and thus to your bill.
When you bill as soon as possible after the work is completed, not only do you start the clock ticking sooner, but the elapsed time to payment has been proven to be faster. This compounding effect can have remarkable results.
In a landmark study by FreeAgent, invoices that were sent within a week of the work being finished got paid, on average, in fewer than five days.
When the invoice was sent just a week later, the amount of time to payment doubled to ten days on average. In terms of waiting to get paid, the cost of delaying gets larger and larger as time goes on.