When you’re running a small business, or working as a freelancer, getting paid on time is one of the most crucial elements of success, and something most entrepreneurs end up stressing about at some point. No matter which industry you work in, managing cash flow is a key component to focus on. After all, outstanding payments from clients can add up really quickly, and mean that you have to cover expenses in the meantime.
If you want to avoid having to constantly struggle to keep your head above water financially, read on for some key ways to get customers to pay you on time, month after month.
Make it Easy for Customers to Pay Quickly
For starters, you’ll soon see payments come in more quickly if you actually make it easy for your customers to pay for the goods and services they buy. It’s important to have systems in place which are user-friendly, and as convenient as possible for people.
For example, it’s wise to accept payments in different ways and forms. Enable shoppers to pay using their credit or debit card; via PayPal and Apple Pay; through a bank transfer; using loyalty points and gift vouchers; and via a direct debit if recurring payments are required. The more choices you give people, the more likely it is that they will find the one they want to use, which will in turn encourage them pay you sooner.
The merchant services platform you select to transact payments also needs to be quick and simple to use. You don’t want people to be in the shopping cart online, or on the phone or using some other method, and have to leave before they’ve paid you, just because they couldn’t work out how to use the payment system, or because it asked for too many details or otherwise took too long.
Be Wary of Who You Offer Payment Terms To
Next, you might operate the kind of business where it’s common to give customers payment terms, whereby they can pay for their goods or services a week, a fortnight, 30 days, or other period after they have made a purchase. While offering this can be good to help increase sales, you don’t want to do it without having a set strategy in place first.
For example, have rules about which customers can go onto account, and when they can do so. Always do a credit check on clients (whether individuals or organizations) up front, and/or ask them to provide references of other businesses they’ve dealt with on credit, so you can investigate whether they have a track record of on-time payments or not.
It’s also wise to get people to pay up front for at least their first one to three orders before you let them enjoy payment terms. This way, you’ll ensure people are really committed to dealing with you regularly, and you’ll be able to get an idea of how they are to deal with too.
State Payment Terms Clearly
Once your customers do get access to credit, always take the time to clearly explain your payment policies to them up front. You need people to understand exactly how long they have to make payments, and what kinds of transaction types you will accept.
As well, ensure your invoices state the payment terms clearly. The due date for the bill, plus the total amount and payment options, should all be showcased in a prominent, easy-to-spot place. The text size should be large enough, too, that people won’t have trouble reading it. The easier you make it for people to know what’s required of them and when, the more likely it is they will settle up their accounts ASAP.
Follow Up Overdue Accounts ASAP
Lastly, be proactive when it comes to chasing unpaid bills. As soon as an invoice goes past its due-by date and hasn’t been paid, send out a reminder. Make use of payment or accounting software that will do this for you automatically – it saves a huge amount of time, and enables you to relax knowing that it’s taken care of and you don’t have to remember to do it yourself each time. All you have to do is set up an email script, or you may even be able to use the software’s own templates.
Apart from the initial reminder, you should also set a schedule for emails (or letters, if need be) to go out regularly until the payment is made. Depending on your business and product type, this might be weekly or monthly.