1. Put your payment terms in writing
If you don’t have a payment policy in place set one up and if you do have a payment policy make sure you’ve communicated it with customers. You can’t hold customers accountable to payment terms if you’ve not communicated them. Use documents such as contracts and invoices to clarify payment terms and avoid customer confusion.
2. Invoice quickly and upfront where possible Regardless of your payment terms
The clock only starts ticking when you issue your invoice so don’t put invoicing to bottom of the pile once you’re able to request payment. If you’re just starting out or taking on a big order ask whether you can invoice upfront for the work. Even invoicing for a percentage of the work upfront can be enough to ensure the timely flow of cash into your business.
3. Clarify customer invoicing processes
If you’re dealing with a large business, spend time upfront to understand their invoicing processes and requirements. Most large businesses require a purchase order request before they will pay your invoice so request this before you start work. If you’re working with a large business for the first time it’s also worth clarifying what’s required to get set-up as a verified vendor so you don’t waste time doing that after you’ve delivered your product or service.
4. Make it easy for customers to pay
It might sound obvious but the easier you make it for customers to pay you the more likely they will. If you’re using an Online Software Program you can offer customers a ‘Pay Now’ option on invoices shared electronically so customers can pay using PayPal, credit or debit cards, with just a few clicks. Offering customers this functionality increases the likelihood of fast payment and saves time on manual data entry as transactions are synced with the Online Software.
5. Pick up the phone and build a relationship
Getting paid on time isn’t just about processes, it’s also about relationships. If you’re due payment from a customer it’s generally best to call rather than send an email. Friendly phone conversations help you understand reasons for a delay in payment and give you an opportunity to request a date for when you will receive payment. If you’ve got multiple customers that owe you payment consider prioritising calls to those that owe you most or are most delayed.
6. Adapt payment terms and incentivise early payment
If you’re finding late payment is a recurring issue for a particular customer don’t be afraid to adjust your payment terms. For instance, if your standard payment terms are 30 days you could reduce them to 14 days to encourage better payment behaviour. Incentives can also lead to early payment. Few customers will turn up the opportunity to pay less for a product or service given the chance so consider offering discounts to those that pay within the first 10 days to encourage prompt payment. With an Online Software Program, you can apply a discount to an invoice in a matter of seconds.
7. Automate follow-up
If you’ve got a big customer-base and it’s a stretch to call the late payers all the time, think about what you can do to automate the process. Apps such as Float and Invoice Sherpa can help you get a handle on the cash coming in and out of your business. Some can also send automatic reminders to customers about invoices that are due or overdue. Another approach to automation is to bulk invoice where you can, particularly when a purchase order has been set up. Many customers prefer this approach as it means they can better manage their own cashflow.
8. Track progress over-time
Fixing the late payment challenge won’t happen overnight so track progress over time to understand what actions are most effective in achieving timely customer payments. An automated Online Software Program gives you real-time access to payment data that can be accessed via a mobile or laptop so you can check-in on payments from wherever you might be.
Source: https://www.intuit.com.au
Recent Comments