Be it a small business or large, cash inflow and outflow are highly crucial. No matter how much you run your business on credit, receiving late payments can cripple your business. Getting paid late will have an obvious effect on your business. Because it will slowly affect the other operations of your business. It takes a lot of effort for business owners to manage their cash flow.
There are many businesses that shut down solely because they run out of cash. Businesses that are doing well will also face issues if they come across more slow-paying customers. If you want to run your business successfully and take it to new heights, then you must have certain rules and policies in place. Because if you have more customers who are paying late, it will jeopardize your ability to pay your bills on time.
Not all credits will be paid in the end. There are 50/50 chances of them paying you. This situation is downhill, you may think that you can get your situation under control. But it is not as easy as it seems. So be careful as your one single mistake can bring down your years of hard work.
If you’re wondering if there is a way to ensure your business is paid on time then you’re at the right place. In this article, you will come across tips that will help you in getting paid on time.
Tips to get paid on time
For any business owner, the priority is to grow sales. Giving credits to people you’re familiar with will bring in more customers and Some of them may become your regular and loyal customers. But the most important question here is, how to determine the right people to give credit, how much to give credit and the time period for which you will lend. If you have clarity on the three factors even if you lend other money your business will not suffer.
Here are a few tips that will ensure you are getting paid on time. Implement these to increase your odds of getting paid.
Establish clear policies
Before anything else, you must set clear policies in place for collection and credit. Even before offering credit terms to your customers. With policies in place, you can decide which of your clients qualify for credit. As in policies, you will chalk out important factors such as which of your clients are eligible for credit, how much credit you allow without hurting your cash flow.
Not only that it will also include the payment terms. It is quite important to have clear policies for your business. As they will act as guidelines for your business. It is never a bad thing to have policies in place as they will guide your business in the right direction.
With technology rapidly evolving, people have also become open to using different payment options. It is important for businesses also to evolve with time to attract new customers and keep their old customers. There are many businesses that have failed because they couldn’t keep up with the changes. If you’re still only accepting payments through cheques then it is high time you change it.
Now there are many ways to receive your payments fast. People can now transfer money with just a few swipes on their smartphones. So if you want to receive payments early then you must provide different payment options to your customers. Always provide your online banking information on your invoices. There are many businesses that are accepting online payments too.
Rewarding your customers on prompt payment is undoubtedly the most effective way to get your customers to pay on time. There is no doubt that it is much more effective than being strict with them. You can offer them discounts in case they make prompt payments. Discounts always work, it will encourage them to jump on the chance and get the products at a discounted price.
You must advertise it for your customers to know. How else will they know about the reward? You can get it printed on the flyers, invoices, Print media, and Tv commercials. The discounted price should be in their mind whenever they come across your advertisements so they react to it.
Remind them regularly
If you have offered credit then make sure to follow it regularly until you get paid. If your policies allow you to give the customers a week’s time to pay, then send them the reminder to pay once the invoice becomes overdue. In the Policies only make up the subsequent days when you will send them reminders. Let’s make it clear with an example.
In case your customer has not paid after your first reminder, then according to your policies, you must have a reminder every week or twice a month for all the periods not paid. Then send them a reminder as specified. You can send them letters to their address in your records or send them an email or give them a call. In any case, sending a letter is official. Make sure the content in your letters is polite. It should be a reminder for them that they have not paid dues and in case they don’t you have the right to take legal action against them.
This is another method that saves both your time and energy. There are many accounting softwares in the market that will help you in dealing with invoices, bill payment, etc. If you issue recurring invoices frequently for your customers then recurring billing software like Reliabills is one of the best softwares available in the market. It comes with recurring invoice templates, account updater, failed payment reminders, etc.
With this software by your side, you have to never again worry about the accounts of your business. Using software will make it easy for you to identify customers who have failed to pay on time and remind them. Having an accounting softwares will save you tons of work and helps you in maximizing your cash flow by minimizing the manual work. From claiming expenses to preparing invoices it automates many processes involved in accounting saving you a lot of time and effort.
Credit check your customers
You must give credit to your customers based on the facts not based on your personal relationship. Because in that case, it will only have an adverse effect on your business. Who would like to give credit to customers who have a long history of not making payments promptly or a business that is about to go out of business? Nobody right? So if you don’t want to end up in such situations then you must credit check your customers.
This is the only way to know more about their customer’s credit history. Sending a few bucks on credit checks will actually save a lot of money and trouble in the future. You don’t have to check every single client because you would be spending a good amount of money if you check even customers with small invoices. So to avoid such situations set a bar for the invoice amount after which you will credit check your customers. This way you will save yourself for big trouble and the fear of overspending.
Maintaining clear communication with your customers is important. It will not only help you in understanding their preferences to improve products. Communication will also convey your values and ideals to them. So tell them clearly how much you appreciate them making payments on time.
Whenever they make payments promptly you can thank them or send them a thank you note. In case they haven’t made the payment on the contact and speak to the debtor to remind them about the payment and the consequences that come if they don’t pay on time.
These are a few tips that will help you in getting paid on time. Hope they’re helpful. Don’t let your customers slide away from making payments. Chase them till they make payments. Make it clear in your reminder letters or calls that they will be charged interest for not making prompt payment. Another small tip is that it would be best to maintain a professional relationship with your customers. Because requesting late payments can be slightly awkward if you know them personally and there are times you can’t reject their excuses. Remember if a client is frequently making late payments it is better if you actually end the relationship with them. Be professional even when you’re ending it. Follow these tips and ensure that your business gets paid on time.