Getting your customers to make timely payments can be a real hassle. It’s easy for you to think that you did your part and relax after a sale. However, nothing is set in stone unless the customer has made the final payment. Of course, your customers will always promise to pay, but not everyone keeps their word.
Failure to get timely payments puts your business in an awkward position; as a business owner, you don’t want to ruin the customer relationship you have established by being too pushy for payments. At the same time, late payments could result in cash flow challenges. Therefore, you need to set favorable terms of payments that could push your customers to while factoring in your business cash flow stability. For instance, you can impose a small penalty for late payments. Here are critical details your business will require when it comes to getting clients to pay on time.
Accurate billing agreement
Make payment terms and means of payment as clear as possible. Avoid setting billing policies to please your customers at the expense of your business cash flow. Instead, be sure that the policies work for both your business and its customers. Also, ensure your customers provide a correct billing address. Get the correct phone number and email addresses during the infancy of the client-business relationship to avoid miscommunication during invoicing and payment processing.
Probably you have been working with an individual like Mr. Smith. That doesn’t mean he is in charge of billing. Based on your customer’s business size, they may have different departments, such as accounting, marketing, and more. That means your primary contact (Mr. Smith) simply forwards invoices to someone in charge of billing. In the event that Mr. Smith is on vacation or too busy, your invoice is like to get stranded in his inbox.
It is recommended to get the right contact information for whoever is handling billing. This way, you can be sure your invoice is being handled by the right person, and it is easier to make a follow up when necessary. You can also cc with the individual you have been in contact with.
Each invoice should be assigned a unique identification number. Create some king of unique numbering to keep your invoices organized. In addition to keeping your business records organized for taxation purposes, it also makes things easy, and heck more professional, in case you need to follow up with a customer on late payment. Remember, the details of your invoices must match the details spelled out in your contract.
Consider sending a detailed about the products offered or services rendered. This can clarify the specific amount to be paid for particular goods or services. And your customers won’t have questions that might delay payments. In case the project is expected to take multiple months, it is recommended to break it down into milestones and set a payment schedule for each milestone. For projects with short deadlines, this is an effective way of staying motivated and getting your payment as soon the project is completed.
Acceptable payment methods
It is recommended to accept a variety of payment methods as this provides your customers the flexibility they need to make timely payments. Nearly all businesses accept traditional methods of payments such as bank transfers though some companies prefer electronic payments. Note that some customers might tell you that the check is in the mail in case they require more time to make a payment.
Fortunately, there are many payment methods that could eliminate the ‘check in mail’ stories. For instances, the booming cryptocurrency landscape facilitates instant payments. What’s more, a growing number of businesses is accepting cryptocurrency payments. Let your customers known the right payment methods that you accept.
Bank details for recurring payments
Of your customers are supposed to make recurring payments, it’s recommended to get their banking details. Bank payments is an efficient option for monthly payments for a yearly agreement or subscriptions. Such a payment arrangement will eliminate instances of delays, particularly during holidays and vacations. With the advancements in the banking industry, a client can renew a subscription or make a payment with just a few clicks.
Invoicing is a crucial business process. The more it is, the better the chances of your debtors paying on time. It is costly and emotionally draining to keep on chasing after your debtors, and in worst cases, such instances could result in cash flow turbulence. While FreshBooks and other similar tools might promise to take the hassle out the invoicing process, you need to go beyond just sending an invoice and make sure every customer pays in time. Theirs is no foolproof legal clause that can guarantee immediate payment, but the tips discussed in this article can help get your customers to stick to timely pay.