Cash is vital for small businesses – to pay their staff, to purchase stock, meet their tax obligations and explore new opportunities. A lot of our small business clients experience cash flow troubles due to their accounts being settled late.
Avoid feeling awkward about chasing up late payments by following these 6 small business tips to ensure you get your invoices paid fast.
We all know that one of the most awkward and uncomfortable situations in business is having to chase up late payments on a bill or invoice. To avoid having to deal with unnecessary conflict, here are 6 tips to get your clients to pay their bills by the due date or even earlier.
Negotiate clear payment terms upfront
It’s vital to have a written agreement between you and the client that clearly outlines terms, deadlines, fees and any other important information. This ensures that you and the client have the same expectations when it comes to when invoices are sent and how long they will have to pay. You can specify certain requirements like ‘due upon receipt’ or ‘˜total amount due within 10 business days’.
Use polite invoice language
There is no substitute for professionalism and that includes the language you use in your invoicing. Always remember to use your manners by wording invoices politely with a ‘please’ and ‘thank you’, as this is proven to build stronger relationships with clients.
Provide an incentive for early payment
This could be a percentage of the total invoice amount for example, a 2% discount on early payment may entice a client to pay the invoice earlier.
Penalise late payment
To encourage prompt payment, you may want to add a percentage fee for late payments for example, a 2% fee on invoices not paid within 15 days.
Be flexible with payment type
While some clients want to pay by credit card or PayPal others prefer direct bank transfers.
Use invoicing software
Sending invoices in the mail takes too long, runs the risk of getting lost and adds to the expense of billing your clients. Using invoicing software like Cashflow Manager, allows the client to get the invoice to their email inbox straight away.
