Suffering from client late payments? 6 steps to minimise late payments
Hello fellow entrepreneurs,
Clients not paying on time is a headache and some times a nightmare for any small business. Small businesses suffer significantly more than large businesses because they do not necessarily have access to reserves of cash or third party funding.
Late payments are a global issue. Governments around the world are now starting to pay attention to this issue for small business entrepreneurs. As long as businesses have been sending invoices, customers have been paying them late.
Here's how to speed them up with some great tips that you can adopt into your business today.
1 - Send your Invoice immediately. Your client can’t pay until you've invoiced them, so send your invoice fast. There is no logical excuse for invoices being prepared after the goods or services have been supplied. With today's cloud accounting software, an invoice can be prepared on site and sent from your mobile phone.
2 - Invoicing to be 100% error free. Make sure your invoice has all the right information, including a description of the work or product, the date it was delivered, and any client requirements (such as a purchase order number). Some clients have very specific requirements so ask what they need to see on the invoice. If they have to come back to you for more information, you could miss the next pay run. Make the due date clear, too.
3 - Ask for prompt payment. Clients used to get weeks to pay invoices, but that's changing. More than a third of businesses now request payment within a week. Consider doing the same. Your client may want to negotiate for more time – and you should try to be flexible – but starting off at seven days will help set an expectation of prompt payment.
4 - Charge penalties for late payments. Many businesses charge fees for late payment. If you'd like to try that policy, make sure it's clear on your invoice. Include a line saying something like: “Late fees are assessed after the due date, at the rate of 1.5 percent per month.” A more positive approach is to offer a discount for prompt payment. The lure of saving money is a powerful motivator, even if
it’s just a few percent discount.
5 - Payment method options. Make it easier for your clients to pay you time by offering them payment options such as direct deposits into your bank account, credit cards, Paypal and other methods.
6 - Payment Plans. If your clients are experiencing financial difficulty with payment of your invoice, encourage them to enter a payment plan with you. At least you are receiving monies on a regular basis until the invoice has been paid in full. Clients will be happy in most cases to repay an invoice over time if they are experiencing financial hurdles.
On-time payment is not just your client's responsibility. There are steps you can take to speed things along. Use these tips to increase your chances of receiving prompt payment, and improve cash flow in your business.
Until next time, take care.
Cheers,
Peter Adams
Clients not paying on time is a headache and some times a nightmare for any small business. Small businesses suffer significantly more than large businesses because they do not necessarily have access to reserves of cash or third party funding.Late payments are a global issue. Governments around the world are now starting to pay attention to this issue for small business entrepreneurs. As long as businesses have been sending invoices, customers have been paying them late.
Here's how to speed them up with some great tips that you can adopt into your business today.
1 - Send your Invoice immediately. Your client can’t pay until you've invoiced them, so send your invoice fast. There is no logical excuse for invoices being prepared after the goods or services have been supplied. With today's cloud accounting software, an invoice can be prepared on site and sent from your mobile phone.
2 - Invoicing to be 100% error free. Make sure your invoice has all the right information, including a description of the work or product, the date it was delivered, and any client requirements (such as a purchase order number). Some clients have very specific requirements so ask what they need to see on the invoice. If they have to come back to you for more information, you could miss the next pay run. Make the due date clear, too.
3 - Ask for prompt payment. Clients used to get weeks to pay invoices, but that's changing. More than a third of businesses now request payment within a week. Consider doing the same. Your client may want to negotiate for more time – and you should try to be flexible – but starting off at seven days will help set an expectation of prompt payment.
4 - Charge penalties for late payments. Many businesses charge fees for late payment. If you'd like to try that policy, make sure it's clear on your invoice. Include a line saying something like: “Late fees are assessed after the due date, at the rate of 1.5 percent per month.” A more positive approach is to offer a discount for prompt payment. The lure of saving money is a powerful motivator, even if
it’s just a few percent discount.
5 - Payment method options. Make it easier for your clients to pay you time by offering them payment options such as direct deposits into your bank account, credit cards, Paypal and other methods.
6 - Payment Plans. If your clients are experiencing financial difficulty with payment of your invoice, encourage them to enter a payment plan with you. At least you are receiving monies on a regular basis until the invoice has been paid in full. Clients will be happy in most cases to repay an invoice over time if they are experiencing financial hurdles.
On-time payment is not just your client's responsibility. There are steps you can take to speed things along. Use these tips to increase your chances of receiving prompt payment, and improve cash flow in your business.
Until next time, take care.
Cheers,
Peter Adams
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