Six tips to get clients to pay on time, every time
A healthy cash flow is essentially the lifeblood of any business. Everything possible needs to be done to ensure that the flow remains undisrupted because the more frequently it gets disrupted, the more damaging this can become, particularly to the bottom line.
As the accountant for a small business, if you’ve noticed that clients tend to be taking their time when it comes to settling their invoices, then it’s definitely worth taking note of these six pointers for getting them to pay on time, every time. After all, the last thing you want is to see a business held back from reaching its full potential because of a cash flow problem that can easily be sorted out.
Create a payment calendar
This is especially useful when it comes to getting paid for larger projects: Instead of sending one large bill upon completion, rather divide the project into parts. The divisions should of course be mutually agreed upon by both you and the client beforehand, and this will result in you sending out periodic invoices to be settled. Not only can this help streamline payment, but it can also provide a useful way of tracking a project. The best thing is also to put a policy in place that says that the next phase of the project will not begin until the previous part has been paid for – this may seem rather harsh, but it definitely helps things run more smoothly for both parties.
Make it convenient
When you make the payment process as simple for clients as possible, they’re far more likely to pay timeously. This can involve offering a variety of options for making payments because in this way, clients will have a choice in how they settle with you. This will show that you’re willing to be flexible, something that clients are bound to appreciate.
Make it worth their while
Most people are suckers for a “good deal”, so by offering some kind of positive reinforcement to customers who pay within a certain timeframe can be a great way of getting them to settle faster. You can use incentives such as offering discounts or freebies, but the important thing to remember is that however you decide to make it worth their while, it shouldn’t be to your business’s detriment.
Send regular reminders
There’s a fine line between being diligent and annoying when it comes to following up on payments, but if you do it right, it can be very effective. Consider sending gentle reminders roughly two weeks before deadlines – this can be done via phone or email. Hopefully clients won’t miss their cut-off date with your reminders leading up to it, but should they, you can then contact them more frequently until payment is made. The key is to remain professional yet firm when sending out reminders.
Enforce your payment policies
This may seem like an obvious one, but very often businesses find themselves being taken advantage of by certain clients. One way to avoid this is to be very clear, right from the start, exactly what your payment policies are and then to enforce them as much as possible. For example, if you’ve stated that there will be penalties (such as a late fee) should a client not pay on time, it’s in your business’s best interest to stand your ground and impose them. Payment policies are in place to protect you so you need to stick to them.
Make invoicing a priority and always show good manners
As we said, cash flow is vital to the sustainability of any business, so because invoicing is the middle man between you and the client, it’s critical that you’re on top of it every month. The sooner you get invoices out, the sooner you’re going to get paid, so it pays, literally, to be as organised as possible. If you develop an effective invoicing system and you adhere to it, chances are the payment process will be far more streamlined. Lastly, a few good manners go a long way. Saying something as simple as “thank you for your continued support” on your invoices, not only reminds clients that there are people behind the business, but this polite approach can really help to endear them more to you.
You go above and beyond for your clients, so it only seems fair that you get paid on time for the services and products you offer. It can be a bit of a battle getting people to pay on time, but the situation is by no means hopeless. Try implementing a few of the tips given here and hopefully you’ll start to see results very soon.
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