Customers: As the owner of a business, you rely on them, appreciate them and are extremely grateful for their business. In some cases, though, your customers also can be a source of frustration, particularly when they are slow to pay you for your goods or services.
Slow-paying customers put a significant strain on any business. These are the people that can make you work weeks or months after you’ve delivered a job just to collect what is owed. These are the people who can impact your cash flow, make it impossible to budget effectively and cost you time and money.
But there are ways to constructively approach this challenge, which almost any business owner is bound to run into at some point. These simple ideas can help you encourage your customers to pay on time, so you can spend less time chasing—and more time earning.
Give customers a good reason to pay early.
It’s hard to deny that we sometimes live in a “What’s in it for me?” society. People can feel more motivated to do something when there is a worthwhile benefit for them. Make yourself a priority to be paid, promotions, discounts or simple customer loyalty plans.
Give them a good reason not to pay late. Give them a good reason not to pay late.
Don’t be afraid to use late fees as an incentive to stop customers from paying late. Make sure it is clearly marked on your invoice & credit application. And stick to it. If you have a late-payment fee in place, don’t waive it for any reason—or you may find yourself with customers who are always forgetful, always dealing with one thing or another, because they know they’ll find forgiveness on your end. This is something we see often and unfortunately you create a culture that it is ok to pay you late and this then becomes known in the industry? Talk to us today to help redraft your Terms & Conditions to protect you in the colletion of overdue?
Shorten your payment terms.
Some customers are just wired to be late, not just when it comes to paying their bills, but with everything they do. Question your default payment terms and ask yourself if tighter turnaround times would make a significant difference to your customers. If not, consider adjusting your terms from the standard 30 days to 15. This can help increase the chances they’ll pay when you want them to—maybe not at 15 days, but at the 30-day mark you had originally planned for.
Make it really simple to pay.
Eliminate any and all points of friction between your customers and payment. People today are accustomed to having a wide range of payment options, so be sure to offer the full range they expect to see. The easier you make it to actually complete the transaction, the faster you might get paid. Utilise todays technology statistics show the increase contact points and options to pay out side of the 9-5 rigid hours will decrease payment cycle ensuring you maximise your cash flow. Check out our Payment Hubb.
Track your deadlines.
Don’t assume your customers are on top of their deadlines. Knowing when payment deadlines are approaching allows you to take action before there is an impact on your cash flow. Follow up a few days before a due date (or even the day of) with a friendly reminder; that may provide just the nudge they need to avoid the hassle of late payment. Check out Payment management service on our website if you need help with this maybe utilize our SMS payment reminders & On Demand App
Don’t be the collector.
When you do run into the occasional customer that simply won’t pay at all, it may be worth hiring someone to handle collections on your behalf. Besides the effort it requires from you, being the collector puts you in a different light with a customer. Even if the late payment means you would prefer not to deal with this customer again, you don’t want them talking to people in a negative light about you personally. Engage experts in this field to support you in the best course of action (Link to debt collection) Slow-paying customers are a challenge for almost every business owner out there at some point, but building in a process to deal with them head on can help you keep your cash flow in check and minimise the overall impact on your business.
- We have never been in this position before, so we can confidently say its unknown territory for us all
- How to Choose the right Debt Collection Agency?
- Small businesses losing up to $7b cashflow from late payments, study finds
- How to help deal with slow payers?