As a business owner, late payments from clients and customers can be extremely problematic. As well as disrupting your cash flow and threatening the financial health of your enterprise, late payments cause a lot of hassle and headaches. Fortunately, however, there are steps you can take to ensure that clients pay their invoices in a timely manner. By being organised and employing the following techniques, you can keep late repayments to a minimum and improve your cash flow.
Put a Clear Process in Place
When you sign a new client, it’s all too easy to get carried away and forget about the practical details. Whilst a new project is undeniably exciting, it’s important to get clear on the practicalities of getting paid. During the onboarding process, make sure that you ask the following questions:
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Who should I send the invoice to?
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What is the approval process?
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Who do I speak to if there’s an issue?
Take time to review and agree to the payment terms, and ask any questions that you’re not clear on. Handling the payment details up front saves so much time and hassle in the future, and dramatically increases the likelihood that you’ll be paid on time.
Make Sure Your Invoices Are Clear and Accurate
It’s imperative that your invoices are easy to understand with a clear pricing breakdown. It’s also essential that they’re accurate; mistakes result in a lot of unnecessary back-and-forth and are likely to delay payment. Sending clear and accurate invoices goes a long way in helping you to get paid on time.
Send Follow Ups
No-one likes to feel as though they’re nagging, but it’s necessary to remind clients and customers when an invoice is due soon. It’s important to be polite and friendly, but firm. Many clients don’t mean to pay late, but they’re busy and it simply slips their mind. A follow up a few days ahead of the deadline is a very effective way of jogging their memory and prompting them to take action. Software like Xero can automatically issue chaser emails to help.
Consider a Late Payment Charge
If late payments continue to present a problem for your business, consider introducing a late payment charge to incentivise your clients to pay on time. No-one wants to pay unnecessary overdue fees, so this is an effective way of ensuring that your clients pay their invoices promptly in the future. Be transparent about these fees from the beginning to ensure that clients understand they will be charged extra for late payments. Make sure to send reminders ahead of time to give them the opportunity to avoid these fees.
Don’t Feel Guilty
New business owners in particular often feel guilty about sending invoice reminders and chasing up late payments, but remember that you have every right to be paid for the products and/or services that you provide. Whilst it’s fine to be empathetic towards clients who may be struggling financially, that responsibility doesn’t fall on your shoulders. The financial health of your business must remain your first priority, so never feel guilty about chasing up the payments that you are owed.
Summary
Being organised goes a long way in ensuring that your invoices are paid on time. Getting clear on the practicalities of payment from the start will help to ensure that the process runs smoothly in the future. Creating accurate invoices and sending them in a timely manner is also enormously helpful. These small and simple steps can have a hugely beneficial impact on the financial health of your business, so make them a priority today.