Having Invoicing Difficulties with Late Payments? How to Get Your Customers to Pay Promptly
Getting customers to pay on time is perhaps one of the most difficult aspects when it comes to invoicing and managing cashflow. Late-paying customers can significantly affect your business operations, resulting in cashflow imbalances and other, even worse, issues.
However, there are certain things you can do to avoid the likelihood of late payments. Following are a few:
Send out your invoices promptly
This can be an obvious solution, but sometimes, in the midst of all our other tasks and responsibilities, we neglect to send out our invoices as soon as we can. Remember that it only takes a few minutes to create an invoice, especially if you have invoicing software, so set some time aside every week to pay attention to this task.
Create clear payment terms in your agreement with your customer
Maintaining a good relationship with your customer is important, yes, but so is making sure that there are clear terms when it comes to payment. Verbal agreements are all well and good, but at the end of the day, late payments negatively affect your relationship. To avoid this, set clear guidelines for payment, such as when the customer should pay, and what could happen as a consequence of late payments. This agreement should be set forth at the beginning of your dealings with your customer, so they have time to absorb it and abide by it with no excuses.
Check your customers’ credit background
Doing a credit check is a standard for banks whenever someone is requesting for a loan. And in a way, an invoice (whether it’s a 10-day, 30-day, or even 90-day invoice) is a form of credit you extend to your customers, similar to a loan from a bank. With this in mind, make it a point to check your customers’ background and ask for any references so you have better peace of mind.
Make it easy for your customers
Another way to avoid late payments is to make it easy for your customers to send you their payments. Whilst bank transfers are a given, you can augment this with other payment methods such as credit or debit card payments, cheques, and money transfers.
Charge a penalty for late payments
This may sound a bit disagreeable, especially if you are a small neighbourhood enterprise who would like nothing more than to be on the good side of your customers, but if you don’t do it, your customers may be more tempted to pay late or simply neglect to pay attention to your invoice. But if charging interest for late payments leaves a sour taste in your mouth, you can always do it as a last resort. Just make sure it is clearly stated in your agreement with your customer as well.
On the flip side, you can also reward those customers who pay their invoices early. An incentive works well, such as giving them a discount for an early payment. Show your customers that you are fair in your dealings with them, and they will be more likely to respond in kind.
If all else fails and you are still having cashflow issues (or you simply do not want to risk the consequences of late payments), you can always rely on cashflow financing solutions like Ultimatefinance.co.uk. With the help of cashflow financing, you can be assured of continuous funds regardless of whether your customers pay on time or not.
Image courtesy of Serge Bertasius Photography/ FreeDigitalPhotos.net
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