Over 20% of small businesses fail in the first year, and almost half fail within the first five years. Several reasons can contribute to the failure of a company, and cash flow problems are a significant contributing factor.
Having an inconsistent cash flow can wreak havoc on your business payments. Without money in the budget, how do you pay utilities or suppliers? Getting customers to pay invoices on time can help significantly.
If you’re battling with some unsettled invoices, read our tips, and your customers will be paying up in no time.
Make Payments Simple
Customers are always looking for the easiest option. For example, why walk to the supermarket when you can drive. It’s faster and requires less effort. In addition, having a straightforward payment system in place will make clients less likely to pay late.
This includes offering several payment methods. The more options you have, the more likely a customer will choose their favorite payment method and process your invoice payment promptly. Credit card, direct deposit, check, or an online payment system are all excellent choices to offer your clients.
Send Detailed Invoices
By the time your customer has left your shop, they will have already forgotten much of the conversation you had inside. Ensuring your invoices are detailed leaves no room for misunderstanding. Furthermore, having it in print means that the client doesn’t have to commit it to memory; the reminder is right there.
Three essential bits of information you want to highlight on your invoices are:
- Payment Options
- Payment Due Date
- Penalties for Late Payments
Having this information visible on the invoice will prompt customers to make payment immediately. You might even encourage your clients to set up automatic payments if they’re regularly doing business with you.
Consider using a free invoice template to make your invoices stand out.
Automate Your Invoicing System
Using software to send out your invoices digitally can benefit your business in multiple ways. It allows you to send bulk invoices and can be programmed to run automatically.
If you’re still not convinced digital is the way to go, if you use traditional mail, you run the risk of your invoices getting lost, resulting in delayed invoice payment.
Incentivise and Penalise
Offering your customers a discount if they pay cash or pay immediately will incentivize them to make earlier payments. Offering your clients a cost-benefit of a 3% discount gets clients paying sooner and builds a positive relationship with your buyers.
Then, penalize those who are tardy with paying invoices. Set your clients a final payment date and mark it on the invoice itself. Then, if by that last date the invoice payment has still not been made, adding a 3% late payment fee will benefit your business and discourage the customer from repeat offending.
Enable Your Customers to Pay Invoices Promptly
Putting some effort into finding ways to encourage your customers to pay invoices in a timely fashion goes a long way to helping your business survive. If your customers aren’t paying you, you will soon battle to pay your staff or suppliers, and your whole business could be in jeopardy.
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