Until the payments are safely in your bank account, your revenue numbers are in limbo. If you are like most business owners, you may think that once you have delivered your product or service and issued the bill to your customer, that your work is done. Unfortunately, it is not always that simple. Getting your customers to pay on time can be a hassle, but it could cost your company a lot more if they don’t. And it can be even more frustrating when you are counting on those deposits to show up so that you can pay your own bills. When cash flow gets a kink, it can take time to unravel it. Best to be proactive in maintaining your cash flow and so implementing ways to get paid faster is imperative.
Here are five ways to speed up your customer payments.
1. Send Invoices Electronically
Electronic invoicing is the process of sending a bill for goods and services to your customer via email. Many invoicing services allow you to send invoices directly from your accounting software or offer tools for creating invoices. I declare NO CONTEST when comparing the time and cost of printing, addressing and mailing an invoice versus sending it electronically. E-invoicing is a convenient and quick way to bill your customers.
2. Accept Credit Cards and Electronic Payments
Every dollar counts, especially when you run a small business. However, there are so many small businesses that only accept payments by cheque without offering any other options. Expand your payment options and start accepting online and credit card payments!! Speed is of the essence and upgrading your payment options will give your clients more flexibility to pay. AND it will reduce the time between billing and receipt. Again, many invoicing and accounting software have apps and add-ons to help facilitate these options with ease.
3. Follow Up BEFORE the Due Date
Send a friendly reminder via email, of course. It’s an excellent way to maintain a positive relationship and to keep the communication flowing with your customers. If you wait until their payment is past due to request payments, you’re missing an opportunity to have a positive interaction with them. Be polite and use friendly language – typically we recommend the follow up be in the form of a question, such as asking your customer to confirm they have received the invoice and are processing it. This is also another great opportunity to share your electronic payment options as they are easier for your customer to take advantage of over the lengthy process of printing, signing and mailing a cheque to you. The goal here is to ensure your customer takes the opportunity to pay on or before the due date. If you’re not comfortable having these electronic conversations, consider hiring a bookkeeping service that knows when and how to send great follow-ups.
4. Measure Client Satisfaction by Scheduling a Project Debrief
Customers that feel valued pay their bills on time. A project debrief is an excellent opportunity to engage with your customer. How did the project go? Was it on-time and on-budget? If so, then TAKE this opportunity to listen to your customer’s perspective and to find out if they have another project that you can handle for them. If the project didn’t go well, then it is even more important to have this conversation. Offer feedback as to how you will approach the next engagement to ensure success. Listen to your customer so that you can focus on their priorities. By keeping customers close, you will build strong, long-lasting relationships. This builds healthy, professional interactions and will motivate your customers to remit their payments on time.
5. Issue Deposit / Retainer Invoices at the Start of the Project
The most significant advantage of requesting money up front is that it provides cash flow towards the project, but it also improves your working relationship with your customer. This can be a very useful tool when you must rely on your customer’s involvement and feedback during a project. If your customer has paid a deposit, they are much more likely to be responsive to your requests and thereby helping to ensure a successful project completed on time.
Wishing and hoping won’t put money in the bank. But having a plan and using technology will improve your cash flow cycle. With these five tips, you can encourage your customers to be in the habit of paying on time, and with timely payments, you can spend more time expanding and improving the products and services that your company delivers.