Tips To Get Your Payments In On Time
Do you have clients or customers who are not paying their bills on time?
This can be one of the more awkward things about running a business. It can also have negative impacts on day-to-day operations if cash flow is constantly tight, especially in small businesses.
But what can you do about it?
How can you get the money into your accounts when you need it? After all, the ball is in your client’s court there.
Thankfully, there are plenty of ways you can encourage them to be timely with their payment.
So, let’s look at some tips for ensuring you receive payments on time, every time!
Tips To Get Your Payments In On Time
Be Clear On Your Terms Upfront
Before you undertake any work or provide any products or services, you need to agree on some terms with your client. Make sure the deadlines, scope of work, fees and penalties are clearly understood by both parties.
That means your clients will know right from the start what they are expected to pay and when.
Agree In Writing
Once you have discussed the terms, it is good practice to agree all of the above information in a written agreement or contract. This way, everyone is on the same page. There is a record of what was decided so that both parties can refer back on it if needed. It will also mean that no one can try to change the agreement at the last minute.
When your clients are busy with their day to day tasks, it can be easy to forget things. Even if they have the best intentions! That is why it is helpful to send out reminders for upcoming payments.
Sending regular reminders about what is due and when, will help to remind your customers when they have payments coming up. Most accounting software will allow you to schedule automated reminders for your invoices.
You choose when you would like the reminders to go out (ie. one day before the payment is due, 3 days after it is due, and so on). Set up as many reminders as you want and you don’t even have to think about chasing payments going forward!
Prompt Payment Discounts
You could consider providing a small discount to clients who pay their invoices before the due date. An incentive as small as 2% can be enough to encourage people to pay on time. This saves you money later on if you aren’t having to spend time and resources chasing late payments, so it balances out.
Late Payment Penalties
You can give your customers extra incentive to pay on time so that it won’t cost them more. Adding penalties on for late or unpaid invoices is another way to ensure people will get their money in on time. They aren’t going to want to pay more than they had initially planned to, so if they can avoid a late payment penalty they are likely to do so.
Have Various Payment Options
People and businesses have different preferences when it comes to making payments. You should make sure you cover all the bases in terms of payment options so there aren’t any hurdles for anyone.
For example, some companies might utilise credit cards or automatic payments, but others might only have the option of internet banking. Allowing instalment options and spreading the costs over a few months is also very helpful to smaller businesses.
Being polite in your interactions with clients and customers is a no-brainer. Something as small as putting a “thank you for your payment/business” at the bottom of an invoice might seem insignificant but it provides positive reinforcement to get the money paid on time.
Don’t Be Afraid To Ask
Sometimes people forget about their bills, or they just need a bit more time to get the money together. Politely following up about a missing payment is part of business and is nothing to be apprehensive about. A lot of the time it simply slipped their mind or they didn’t see the invoice come in, and they appreciate the reminder!
Delay Work If Necessary
A customer or client with a history of paying late sometimes needs a bit of extra management. If other attempts to get invoices paid haven’t been successful and they still owe you money, stopping services until they get caught up might be necessary.
Part of getting the money you are owned into your account on time is having a great accounting system that is backed by a great accountant. Drop us a line here at Accountants Plus if now is the time to get your payments in order as we can take this hassle away for you.