When operating a business, there are numerous factors to work on continually, such as sales, marketing, customer service, and product or service development. However, those things are moot if you don’t have adequate cash flow to pay your bills and keep the venture’s doors open. There are multiple aspects to keeping cash flow on track, one of which is getting income coming in often enough.
If you have a business setup that means customers pay you on account, you undoubtedly often get frustrated at late payments. Too many of these can add up to disaster for your organization, so take steps to get clients to pay you quicker.
Invoice More Quickly and Clearly
Don’t take too long to invoice clients when they pay for goods or services on account. While you may not enjoy doing this kind of admin work and often push it down the list, the reality is that the sooner you get bills sent out to people, the sooner they can pay them. Plus, when you’re proactive about invoicing, people will realize that they should be similarly speedy about making payments.
Keep in mind that these days there are terrific invoice management software tools you can use to take care of a lot of the hard work for you in invoicing. You can set up programs so that you only have to feed in a few pertinent details, and the software will generate and send the bills out for you.
Chase Unpaid Bills
It’s vital not just to send a bill and then leave it at that; instead, remind people that a due date is coming up and then send them weekly or at least monthly reminders until they have made a deposit or otherwise given you the money. The more persistent you are with this, the less likely it is that people will forget to pay or think it’s okay to take as long as they want.
Happily, tech tools can also follow up on unpaid invoices for you so people settle up their bills. You can choose how often you want reminders to be emailed out and then “set and forget” this side of things and let the program take care of the rest.
Be Consistent and Clear with Payment Terms
Another tip is to ensure that people understand your payment terms and won’t try to quibble over them. Be consistent with noting the same terms on each invoice, such as 10-day or 30-day timeframes, with money to be deposited by direct deposit or paid by credit card only, for instance.
Where possible, have the same or at least similar terms for different clients, too, especially for new ones. That way, if people talk, there’s less likely to be some who get their noses out of joint when hearing that they don’t get as favorable options as some other customers. When you first allow people to go onto account terms, it’s wise to verbally go through all the conditions and have them sign a contract acknowledging and agreeing to these terms.
Make sure people don’t have to search for information about how to pay you, either. Each bill should have the due date, amount owed, and your bank account or other relevant details clearly labeled and set out on the page somewhere that won’t get missed. The font should be easy to read and large enough that no one has to squint to read it.
Consider Incentivizing Quick Payments
People are typically very self-focused and more likely to pay accounts ASAP if there’s something in it for them to do so. You might like to incentivize quick payments to encourage your clients not to delay paying you. For example, you could offer five percent discounts on their next order if they pay within a set period or qualify them for free or discounted shipping if they’re speedy payers.
Another option is to give them some free gifts with purchase, additional loyalty points they can convert to goods or discounts, or the chance to be the first to buy from your new-release ranges. Think about what will work for your profit margins and business type and incentivize accordingly.
Other ways to get customers to pay you quicker include providing them with plenty of payment options so they can find the choice that suits them best and managing relationships with your clientele so they’re more likely to respect and like you and thus pay sooner.
Also, avoid giving out terms to the wrong people and businesses in the first place. Each strategy you employ will help you get your cash flow running more smoothly and take some stress off your shoulders.