Get your clients to pay their bills on time using these simple yet effective tricks.
Small businesses are suffering from the repercussions of receiving late payments ever since the last recession started. According to the results of a survey conducted by the National Federation of Independent Business (NFIB), a leading business association which aims to protect the future of small businesses, 64% of small businesses have invoices that went unpaid for about 60 days while 20% claimed that delinquencies are getting worse.
Needless to say, the predominance of slow paying accounts is seriously affecting the well-being of small businesses. Aside from creating additional administrative work, late payments force some businesses to keep their recruitment and expansion plans on hold. It can even lead to bankruptcy if a large invoice is not paid on time.
Realizing the severity of the situation, you need to get your clients to pay their bills on time every time. How do you do it? Here are some suggestions that can help you turn your invoices into cash within a shorter period of time.
Get it in writing. Discuss invoice payment expectations and payment options when taking in a new client or renewing a contract for an existing client. Make the payment terms convenient for them, and draw up a contract specifying the payment terms and how you would deal with late payments. When both parties are involved in the decision process, there is a greater chance that there would be minimal or no payment-related problems down the road.
Automate the invoicing process. It is better to use online automated billing systems since sending paper invoices requires more time and may even get lost in the mail. For best results, try these free invoicing tools – Curdbee, Make Some Time, Invoice Machine, Zoho Invoicing, Ronin and Paymo.
Use reinforcements. Using positive and negative reinforcements can help you collect payments in a timely manner. Some people will respond to positive reinforcements such as discounts while some will react to negative reinforcements such as penalties. When using this tactic, make sure that you come up with a reasonable amount that will encourage your clients to pay without losing them and/or without affecting your bottomline.
Don?t be afraid to follow up. Instead of waiting patiently for your payment to arrive, consider following up and asking about the payment. Some business owners don?t want to do this for fear of upsetting their clients but some get the results they need by simply asking for it.
Establish a good relationship with your client. Business owners who maintain a good relationship with their clients generally get paid on time. So, get to know more about your client, their business and industry, share a little bit of yourself, respond promptly to their emails, and go the extra mile to keep them happy. These little gestures can go a long way and increase your chances of getting paid on time every time.