Average Invoice Paid 14 Days Late: Here's Why

Invoices are paid an average of 14 days late, primarily due to internal approval delays, payment path friction, and lack of follow-up. Addressing these issues with the right mechanisms can significantly improve your cash flow.

Why Are Invoices Sent Out Late?

Internal approval delays are a major reason invoices are sent out late. Often, invoices are stuck in the approval process, causing unnecessary delays. Implementing an approval policy engine can streamline and automate this process, ensuring invoices are approved and sent promptly.

How Does Payment Path Friction Affect Timeliness?

Payment path friction occurs when the payment process is complicated or cumbersome, leading to delays. Utilizing a hosted payment page and payment links that run on the tenant's own Stripe account can simplify the process, making it easier for clients to pay promptly.

What Happens When Nobody Follows Up?

Invoices often remain unpaid because there is no follow-up. Relying on manual reminders can lead to missed opportunities for payment. An automated workflow can handle the chase, sending reminders automatically and ensuring that invoices are paid on time.

Comparing FreshBooks and Stripe Invoicing

Both FreshBooks and Stripe Invoicing excel in handling the payment process but fall short in addressing internal approval delays. FreshBooks offers more features overall, including bank reconciliation and expense tracking, while Stripe Invoicing provides a flexible payment infrastructure ideal for SaaS companies. However, neither platform offers a solution for internal approval delays, highlighting a critical area for improvement.

How to Calculate ROI on Automated Invoicing

To calculate the ROI of implementing an automated invoicing system, consider the average number of invoices sent monthly, the average delay in days, and the cost of capital. By reducing the delay, you can calculate potential savings and compare them to the cost of implementing the system. This calculation can help you determine the financial benefits of streamlining your invoicing process.

Conclusion: Streamline Your Invoicing Process

To improve cash flow and reduce invoice payment delays, consider installing an invoicing system like Invoicing that addresses these common issues. By automating internal approvals, simplifying payment paths, and ensuring follow-up, you can significantly enhance your invoicing efficiency.