How To Encourage On Time Payment And Achieve Better Cash Flow
When it comes to paying the bills, not every client acts responsibly. Businesses face a challenge when their clients are purposely avoiding them and not making their payments on time. Although sometimes missed payments are an honest mistake, most of the time these are deliberate. This issue can cause a lot of problems for businesses and kill cash flow. Therefore, it is important for every business to implement smart strategies to get efficient payments without any hassle. So, how do you get your clients to pay? Let’s take a look…
Write Great Invoices
A plain and boring invoice that says ‘your total amount is $XX’ is not going to do much to make payments happen quickly. You need to be more creative with the use of words and phrases in your invoice. Make sure you rephrase your sentences by adding a cordial thank you. By saying ‘thank you’, you are encouraging your clients to pay the bill and the tone itself can have a great impact on client’s action. Depending on what stage of a job or service you invoice, you may want to remind your customers that their service is almost complete, so they know that they need to make payments.
Make it Easy to Pay You
To get paid quicker, you can do yourself favours by making it easier to pay you. Offer as many options as possible; EFT, Bpay, Credit Card and even online payments direct on your website. Taking credit card in today’s day and age is an absolute must, and consider trying to get payment there and then at the completion of the job and avoid the hassle of chasing overdue payments later.
Offer Discounts or Incentives
A great way to encourage payments is to offer discounts or incentives to your customers. Send a message to your clients telling them about a discount or incentive for those who make their payments in advance. This offer will often motivate customers to pay you before time.
Clearly Mention Deadlines
In order to collect payments on time, you need to make sure that your customers are aware of the due-date. Clearly mention the due-date to your clients in the invoice. By highlighting the due-date and even adding an additional price to late payments, you will be able to encourage on-time payments. Adding multiple due-dates with increasing fines could also a good strategy for some markets.
Add Details in the Contract
Another great way of encouraging clients to make their payments is to write a detailed contract and by mentioning the fee and its due-date in it. So, when clients sign the contract, they agree to follow the requirements and policies, and if they fail to do so, you have the right to conduct legal action against them. This is perfect for keeping clients’ accountable and aware that they need to be responsible with the payments.
Being polite is something that many clients appreciate. Therefore, if your clients haven’t made their payments, make a polite call and tell them that their payments are due. Make sure you adopt a cordial tone and ask them innocently and without prejudice. It’s easy to assume all customers pay late intentionally, but it can be an honest mistake, so don’t paint everyone with the same brush. This will encourage clients to make their payments. This needs to be done regularly, but no so often that you become a menace.
Send Statements or Overdue Reminders
Sending monthly statements and overdue reminders can be a great way to again remind customers of their responsibility to pay on time. Most good accounting software can quickly and easily email statements straight from the software at the end of each month. Overdue reminders need to begin being very polite and softly worded, increasing in firmness as the time overdue increases.
The best way to avoid irresponsible and tricky clients is to conduct a background check before signing a contract with them, or offering them an account with credit terms. Ask for credit references on your account application forms if you use these, and make sure you actually check them out. Talk to people who have worked with the client in the past and it will help you make the right business decision, which will save your time, effort, and most importantly money.
Say Thank You
If a client is a great payer, take the time to thank them. When you notice you are being paid on time, or even in advance of a due date, take 30 seconds to pick up the phone and thank them. It can go a long way and helps to build a relationship.
When you get on-time payments from your clients, it increases your cash flow and helps you take up a greater number of contracts. It is also helpful in keeping you focused on your real job.