One of the most important aspects of running a successful small business is having a strong, steady cash flow. But it can be difficult to maintain a steady cash flow if you spend time and money chasing down late payments. In an effort to help make your cash flow consistent, you can focus on shortening the time between the billing and collection processes.
Here are four tips on how to get paid faster:
1. Put Prompt Invoicing Practices Into Place
By sending out an invoice as soon as the corresponding job is completed or relevant product is delivered, you can help improve your odds of getting paid quickly. Prompt invoicing practices also show your clients and customers that your company is efficient and organized.
2. Offer an Early Payment Discount
Everyone loves a discount. An early payment discount will allow your customers to save money while helping to ensure that you get paid faster. If your invoices are typically due in 30 days, for example, you can offer a 5 percent discount for immediate payment. By offering these types of discounts, you can give your customers an additional incentive to return to your shop or e-commerce site.
3. Accept Credit Cards
Does your business accept credit card payments? If not, it may be time to consider offering this capability. This payment method can help you simplify the process, accept payments over the phone or online, and avoid making a special trip to the bank to deposit checks.
4. Follow Up on Late Payments Immediately
If your invoices include time specifications, you should follow up with your customer on the day after the missed deadline. For example, if you have a notice that reads "Please pay within 30 days of the date of this invoice," you should reach out to your customer concerning a late payment on day 31.
To help ensure that you are paid in a timely manner, you must have a consistent program in place to track and handle any outstanding invoices. If the missed bill is a simple oversight, a quick email or phone call may be all it takes to trigger payment. But if the late payment turns into a problem account, you should take additional action sooner rather than later to help reduce the chances of additional late payments from this customer. In serious cases, you may want to refer to a collections agency.
As a small business owner, it's crucial that you set up a streamlined, efficient system for billing clients and collecting payments promptly.
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