When you’re running a small business, one of the biggest stresses month upon month often tends to be cash flow. No matter the industry you’re in or what kind of product or service you sell, trying to make ends meet can be challenging. This is especially the case if your clients take their time paying you.
While you may think waiting a few days here or having to write off a small invoice there won’t make too much of a difference, these outstanding payments can add up very quickly and have you continually trying to keep your head above water.
Read on for some top ways you can get customers to pay you on time today, so that the cash keeps on rolling in.
Make Payments Quick and Easy for Customers
For starters, one of the best ways to encourage people to pay in a timely manner is to actually provide a variety of payment types for them to choose from, so that they can opt for the most convenient method for them at the time. After all, consumers like to have choices these days, rather than just be limited to one or two transaction options.
For example, in addition to allowing people to pay you with a check or cash, it is wise to consider accepting methods such as direct deposits, credit or debit cards, PayPal or Apple Pay Accounts, and automatic direct debits. You might also want to think about letting customers pay over the phone, online (a merchant services firm is very helpful for this), with electronic checks, or via individual or batch ACH payments.
Run Credit Checks Before Offering Accounts, and Make Payment Terms Clear
If you do choose to allow customers to go onto payment terms, rather than paying upfront for goods or services, it is important to run credit checks first. This will help you to weed out those clients who don’t have a good history of making payments on time to other businesses, and will work to reduce the number of invoices which get paid very late or never at all. You can also ask customers to provide you with a list of at least three referees who you can contact to find out about their payment history.
Once people are on account, you must also ensure that you take the time to clearly explain the set policies you have in place so that know what is expected of them. For example, ensure they are aware of how long they have to make their payments, and what forms of payment you will accept. You should also let them know that they will not be able to place new orders if they have bills which are overdue. You may also want to consider getting customers to sign a written agreement if large amounts of money, and time, will likely be involved in their account.
It is important, too, to always put the due date of an invoice in large (and preferably colorful) print on the paperwork so that it can’t be missed. Your bank account details and other necessary information should also be posted in a prominent place so that people don’t have the excuse of not making a payment because they couldn’t find the necessary details.
Send Out Regular Reminders
Another good way to get people to pay on time is to send out regular reminders and have a set schedule for these follow-ups. Lots of people will simply forget that they have a bill due, or will think that they can get away with paying their invoice later. As well, sometimes bills can get lost in the mail or in cyberspace if they are emailed out.
Sending clients a reminder as soon as an invoice becomes overdue (the first day) will alert them ASAP to a missing bill, or remind them that you expect payment on time. Don’t just send a single reminder either; if people continue to not make payment, it is wise to keep sending out reminders every week until you receive your money.
While you can certainly send out reminders manually by making a note of dates and customers in your diary, and then writing up letters and posting or emailing them, it is much simpler if you take advantage of the automated online systems which are available these days. You can choose specific reminder tech or, for a very easy choice, utilize a digital accounting program. Think Freshbooks, Quickbooks for Small Business, or Xero, for example.
How do you keep your clients paying on time? Share in the comments.
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