Get Your Customers to Pay for Your Goods & Services Quickly
Your business needs a productive cash flow if it is to stay afloat, but that won’t happen if your customers don’t make their payments on time. While you can’t force customers to pay what they owe, there are still some things you can do to get most of your customers to make their payments quickly so you will always have money in your bank account.
Analyze Your Credit Term Policy
When you’re just starting out, your credit term policy will be integral to your early success. You need a net term policy that helps your customers feel welcome, but you also don’t want it to be so advantageous to them that it hurts your budget. You need to find a happy medium, which for most businesses is a net 30 term. You can extend that to a net 60 term if you wish, but you need to be careful about doing this too often for too many customers. If you want to encourage your clients to make payments quickly, offer a one percent discount for those who pay within ten days of receiving an invoice.
Consider Electronic Payment
Having several convenient payment options is one of the keys to getting your clients to pay quickly, and few things are more convenient than being able to make payments online. While you do have to make sure your website is secure if you’re offering this service, any payment that is made electronically from a debit or credit card is posted almost immediately to your account. Your customers can make payments at any time without having to spend money on stamps or taking the time to write out checks.
Simply Ask for Payment
Most people don’t like to ask for money even when it’s owed to them, but sometimes simply asking your clients for payment is what encourages them to make their payments. Some customers simply forget that they owe a payment, so asking will be a good way to remind them of their innocent mistake.
Make Invoices a Priority
You have several things you need to manage as a business owner, but your invoices should always be a top priority. An invoice should be sent out via email or fax within a day of getting a good or service to a customer. Invoices that are sent out quickly are usually paid just as quickly.
Don’t be afraid to include fees when it comes to your financial terms. Late fees, shipping fees, and fuel surcharge fees won’t thrill your clients, but they will encourage them to make their payments on time if only to avoid having to pay more. These fees will also help offset some of your own business expenses, especially those associated with shipping your products. Interestingly enough, these fees can also give you a chance to create customer loyalty programs. For example, if a client regularly orders a particular product, you can start giving them discounts or even waiving fees after they’ve made a few purchases.
Invoices are a constant hassle for small businesses, but they are essential for generating a reliable cash flow. Keep these tips in mind, and do everything that you can to ensure prompt payment from your customers.