Any successful business seeks to go above and beyond for their clients. However, often time this effort does not translate into on time payments. Overdue invoices and bad payers can be crippling for businesses, even if sales are up and expenses are down. Having debtors can quickly escalate and send your business into serious financial woes. Attempting to retrieve overdue payments is never a pleasant exercise but it is a necessary one, nonetheless. Here are 5 top tips to make sure your customers pay you on time, every time.
1. Accept Various Payment Methods
As a business it is essential to make it as easy as possible for your clients to pay you. Expanding the methods by which you accept payment is one way to encourage your clients to pay more quickly.
Cheques are rapidly becoming a thing of the past. Credit card payments are increasingly the way people like to pay. However, there are a range of other payments that you should consider expanding into your business operations such as PayPal payments, direct bank transfers, e-checks, and other methods that make sending money easy and safe. The easier your clients find it to pay you the more likely they will pay you on time.
2. Offer incentives
One way to keep your cash flowing is to incentivise early payments via the form of a discount. An early payment discount, even a small 5%, can encourage your clients to pay early or at the very least on time. It also helps you keep your books accurate as outstanding invoices will not linger or potentially get lost. You may be surprised at how quickly you get paid after adding a simple incentive – make sure your incentive is clear and highlighted within the invoice.
If positive incentives don’t seem to be doing the trick, consider telling your clients the consequences of late payments. You may choose to charge interest on late payments. This should not be done for financial gain so do not charge astronomical fees as this will not incentivise payment but could have a rebound effect.
3. Keep up your relationships
Maintaining a positive and trusting relationship with your clients is the number one way to ensure you are paid on time. If your clients value your relationship and work, they will likely make timely payments knowing that it will enhance this already positive relationship.
When generating your invoices, it is very important to mind the language you use. Courtesy can go a long way in producing timely payments. Invoices that contained phrases like “please pay your invoice within” or “thank you for your business” resulted in an increase of “the percentage of invoices that are paid by more than 5 percent,” according to a finding from FreshBooks.
4. Perform a background check.
When taking on new clients it is important to make sure they have good credit. Many clients may seem creditworthy and noble, but you simply can’t be 100% sure without a proper background check. It is important to inform your potential client that you are conducting a check. It is also important to note that a poor credit history does not always indicate a bad payer – see if your potential client has a convincing reason to substantiate their poor rating. One way to mitigate this possible risk is to ask for a portion of payment upfront, this is a good indication that your client will pay up.
5. Have a Collections Policy
If all of the above fails, you need a contingency plan that will ensure your business stays out of debt. Before beginning any business, you need to consider the possibility that your clients wont pay you and how you are going to address this.
You can reach out to professionals like MarisIT to assist you in sending a final demand letter and listing a bad payer, as well as get assistance with debt collection. These tactics need to be used as a last resort as you do not want to burn any bridges with clients that may simply be absent minded.
Contact MarisIT today for all your credit decisions. We provide comprehensive credit checks, background checks and can assist in collecting your business debt.