For small businesses, few things are more crucial than prompt payments as delays could disrupt cash flow seriously.
Regardless of the type or kind of business you own, timely payments are crucial in meeting accounts-payable deadlines.
There are various reasons why businesses don’t get timely payments as they would like, which frequently has no connection with the quality of their product offering. Ideally, customers should pay before the due date; however, this isn’t always the case.
You will occasionally come across clients who are slow when it comes to payment or attempt to skip out all together. Although numerous business owners think there’s little they can do to ensure timely payments, these tricks can motivate your clients to pay their bills while maintaining cash flow.
1. Specify Payment Timeline
As a business owner, you must be clear on your invoice. Including specifics generates a sense of urgency and ensures both parties are on the same page. Don’t permit the opportunity for confusion. You must inform your client when he or she signs the contract how much time he or she has to pay you.
Furthermore, you should restate your policy on the packing slip and billing invoice; this avoids any ambiguity regarding the payment date. Indicate whether your client will incur a charge for late payment and the amount. If your client notices surprise charges, he or she will fight rather than pay you, so ensure you provide clients with as much information as possible in order to work within the same framework.
2. Invoice Promptly
Invoicing can be cumbersome. However, delaying it conveys the message that receiving payment isn’t your priority. Ensure you spell out the exact date of payment; wording is crucial. Invoices that use the term “days” rather than “net” are paid more often and faster.
For a small business, cash flow is extremely important. Although it sounds simple, the sooner you send an invoice, the sooner you’ll receive payment. Where possible, send out the invoice before completion of a project or in phases.
For instance, if a project will take six months, consider monthly billing. In some instances, it may be suitable to request payment before shipping the item or completing the project.
3. Provide Convenient Options
These days, online money transfers and electronic payments have become common. If you wish to have satisfied clients, you should offer diverse payment options. Electronic payments are great, but you should engage a company that deals with these types of payments to ensure the implementation of the appropriate services.
Online options such as the capacity to pay using a credit card are a smart means of simplifying payment for clients so your business receives cash faster. Allowing electronic options will accelerate the amount of time it takes and the number of clients paying you within a practical timeframe. You will notice a much faster response when you give clients the chance to pay electronically.
4. Payment Reminders
Regrettably, numerous small businesses send invoices and forget to follow up, resulting in payment delays. You need to recognize the date you sent an invoice and follow up right away if you haven’t received payment within the stipulated time period.
Typically, invoices can take weeks for payment to take place; this can affect your business’s cash flow. Consequently, it is crucial you perfect your follow-up strategy. At times, a quick call or email is all that’s required.
Alternatively, you could implement an automatic reminder once every week and on the due date until you receive payment.
5. Numbering System
Adopting a numbering system for invoices is a great means of tracking your bills and clients. It is also vital to maintain consistency once you begin a numbering system. This makes it easier to retrieve files in case of auditing and helps maintain organization.
Bear in mind that the most efficient solutions are frequently very simple when seeking ways to accelerate payment from clients. The invoice you send out to clients is perhaps the most significant communication in regards to receiving payment. With a few additions and adjustments to your invoices, you could accelerate payment and enhance your chances of receiving payment.
Dailey Bookkeeping Services is a Xero Certified Bronze Partner and a QuickBooks Online Certified Advisor, so if we can help you with efficient invoicing, just give us a call, we would love to help you! The owner, Jacqueline Dailey is a Certified Public Bookkeeper, an Advanced Certified QuickBooks and QuickBooks Online ProAdvisor, a Sleeter Group Certified QuickBooks Consultant and a Xero Certified Bronze Partner. We work remotely so we can work with any company located in the U.S. If we can help you with this process or provide you with custom reporting, please give us a call. If we cannot help you, we will refer you to someone who can! Feel free to visit our website at http://www.daileybookkeeping.com.