How to Collect Payment Faster
Running a business is hard enough as it is, so dealing with late payments from forgetful or lazy clients can be a nightmare, especially if your business is running low on financing anyway. Fortunately, there are several ways you can help instigate and encourage prompt or even early payments, and to help you, we have compiled the most effective ways to get your clients paying their dues.
Invoices provide clients with a narrative that payment will be due soon, and can be especially helpful to those clients that tend to be more forgetful. Invoices should be sent out at least a week or 10 days before the payment is required, and should include proof of the services or products that have been used by the client, and a recounting of the terms of service.
Early Payment Discount
Early payment discounts are an easy way to receive early payments while also being seen as a generous business. This method is as simple as offering a 3% discount for payments made before the end of a specified period, like 30 days. By implementing this opportunity, clients will be much more likely to pay early and continue giving you their business, which means every discounted bill you offer will eventually be paid back.
Contracts are a simple, effective way to keep your clients paying on time, so before you begin a new relationship with a customer, agree on a written contract with clearly stated terms. Every contract you provide your potential clients should include the following terms:
• When payments are due
• How much each product or service costs
• The products and services that maintain additional fees
• Penalties for late payment
By first requiring a written, legally accurate document that requires confirmation from both parties, your clients will be significantly more likely to maintain prompt payments.
Online payments can help with maintaining prompt client payment as the ease and accessibility of the internet makes paying bills significantly less tedious. Initiate your business into the world of online payment options by offering your clients payment though credit or debit cards, or electronic checks. This method is additionally beneficial to your business by saving money that would otherwise be spent on envelopes, paper and stamps.
Being left without any cash to continue running your business due to late customer payments can be a strain on any business. To help get past the late payments and financial stress, try implementing these strategies with your clients. If utilized correctly, your business should see payments, and therefore financial success, in no time at all.