4 Ways to Get Your Clients to Pay Their Bills & Invoices on Time
Late payments are one of the most frustrating aspects of owning a small business. After providing a good or service to your customer, you’re forced to wait for an indefinite time until payment is made. Without having the luxury of liquid assets and a steady cash flow, the success of small businesses hinges largely on the ability to get paid on time.
Not to worry, though, we here at PaySimple put together these four simple tips to get your clients to pay prudently:
Use Recurring Billing to Automate the Collection of Payments
One of the easiest ways a small business can get its customers to pay bills and invoices on time is by setting up recurring billing. It’s a fact of the business world that payments will be forgotten about. Regardless, an online recurring billing system will help eliminate this problem. Simply input your customer’s billing information, the amount of each billing transaction, and the method of payment into your online billing software. From that point forward, every month on the chosen billing date, the billing software will automatically charge your client’s credit card or bank account, and your client will instantly receive an email receipt. With recurring billing, you’re able to spend more time prospecting for new business and less time worrying about collecting monthly payments.
Send Electronic Invoices to Avoid the Delay of Paper Invoice Processing
Seeing as not all customers are making recurring payments, another way to get your customers to pay faster is to take time out of the loop by using email invoicing. Misplaced or lost-in-the-mail paper invoices are a common problem dealt with by small businesses of all shapes and sizes. Sending an electronic invoice is as simple as drafting the invoice in your online payment software, entering customer payment information and billing amount, and clicking “Send.” Your customer instantly receives the email invoice and is able to make payment directly using a secure online payment form. Sending email invoices will help eliminate those dreaded collection conversations; “We’re sorry, but we never received your invoice. Could you please resend it?” and “We apologize, but we misplaced the invoice. May we have an extension?” Better yet, you can send automated reminders when the invoice is about-to-be or is X many days overdue.
Maintain a Database of Customers to Keep Track of Payment History
If you’re one of the many successful small business owners out there, you probably have a healthy client portfolio. So healthy, in fact, that you might not be able to keep track of your customers that are paying on time and those that are consistently tardy on payments. By using an online customer database, you’ll be able to keep track all of your customer payments in one location; no more sorting spreadsheets and files to find information.
Perhaps the Smith account has been paying three weeks late for the past six months; it might be time to make a call to their accounts payable department to discuss a new late payment penalty. Maybe the Johnson account has paid on time for the entire year; send them a small gift letting them know you appreciate their business, or give them 10% off the next invoice for paying on time. By keeping your customers in a database, you’ll be able to see and act on these patterns much more effectively.
Set Up Early Payment Incentives & Late Payment Penalties
Incent your customers to pay their invoice on Net30 terms by offering a 10% discount on the invoice. You would be surprised at the power a small discount has on increasing payment time. If your incentive policy isn’t working out as planned, you can also implement a late payment fee. A rule of thumb though; do not charge a late payment fee for your company’s financial gain, but rather make it a late payment deterrent for your customer. A $10 per week late payment fee won’t increase your bottom line, but it’s a sufficient amount to encourage your customer to pay on time. Threatening hefty late fees is a sure way to scare away potential clients.
If you’re interested in online billing software that will help you simplify the way you bill and collect, check out PaySimple. Sign up for a free demo and one of our product experts will be able to answer any questions you may have.
Invoices by cybrgrl, on Flickr