Dann, May 24, 2016
When you’re running a small business, getting paid on time is crucial to your success—if your customers pay late, it can cause problems for your cashflow, which in turn causes all sorts of other problems. Unfortunately, this is a very common issue for small businesses, especially those who don’t accept credit cards.
There are quite a few things you can do, however, to make sure you doget paid on time. Here are five strategies you can use to keep cash moving.
This is the easiest, and possibly most important, way to encourage your customers to pay on time. If they can pay with a credit card right away, without having to wait for an invoice, they’re much more likely to just get it out of the way.
You might think it’s expensive to accept credit cards, but SmartTrade makes it easy, fast, and really affordable to take payments from the jobsite, over the phone, or online. Check out the details here.
This is an important one. If a customer doesn’t know how much they owe you, they aren’t going to pay. Automating your invoicing is a great way to encourage customers to pay quickly and prevent cashflow issues.
SmartTrade lets you quickly invoice via email so your customers get their bill immediately. Even if you’d rather use paper, though, you need to make sure to get that invoice out the door as quickly as possible.
Your invoice should make the payment terms very clear: if you expect your customers to pay within 14 days, make sure that’s spelled out very clearly on their bill. Choose a timeframe that you think is reasonable (you may want to allow a longer window for larger invoices), and make sure it’s clear.
This is also something you might want to bring up when you agree on the product or service that you’re selling. If a customer goes into the transaction knowing that they need to pay promptly, that’ll be on their mind when the invoice comes.
This won’t work for everyone, but giving your customers the option to pre-pay for your product or service and thanking them with a small discount (even 5%) can be a big incentive for them to pay early.
Even if you can’t offer a pre-payment discount, you might be able to figure out something similar that will work for your business.
Repeatedly emailing or calling clients to remind them to pay isn’t a fun job—but it might be the thing that gets them to pay. Especially if you have a client that tends to be late for all of their payments, it could be worth your time to get on the phone or fire off a quick email.
Unfortunately, getting on your customers’ case might not be great for customer relations, but if it’s the only option that’s going to work, you’ll just have to suck it up and do it.
Getting paid late is more than just a hassle; it can also hamper your cashflow and make it harder to run your business. Because of this, it’s important to do whatever you need to do to get paid on time, whether it’s encouraging customers with a pre-payment discount or hounding them until they pay. And, of course, you should always make it as easy as possible for customers to pay with the payment method that they prefer.
How do you encourage your customers to pay on time? Leave a comment or let us know on our Facebook page!
Image credit: Chris Harrison via Flickr.