Imagine having a productive cash flow, but it’s inaccessible because your customer’s aren’t paying. That’s money that you have coming to your business that you can’t use to develop new products, hire employees or advertise. For most business owners, that’s a realistic scenario that they wish to avoid. The following tips will help your customers pay quickly and put more money into your bank account.
Analyze Your Credit Term Policy
When you first start your business, the net term policy is integral to your success. Although you want your customers to feel welcome, you don’t want the terms to be a disadvantage to your budget. Net 30 terms are typical for most businesses. Some may even extend past the normal 30 and into a 60 day range. To get people to pay early, offer a 1 percent discount for customers who pay within ten days of receiving the invoice.
Consider Electronic Payment
In order to get paid timely, you need your customers to have access to the best payment options. TRX transaction services provides safe and secure payment processing while maintaining high levels of data security. Your customers are entrusting you with their credit card information. Although you want them to pay within the required net terms, you also don’t want any security breaches or hackers to steal their information. Whether they choose to pay via debit or credit card, the money automatically gets processed and placed in the company’s business account. This is especially helpful for customers who are on C.O.D. terms.
Ask for Payment
You may be reluctant to ask for payment once a customer has gone past their terms. Whether you hate to collect money or you don’t want to offend, you’re only hurting your own business. An invoice may have not made its way to the customer. They may have also forgotten to send payment. A reminder by way of phone call or email connects you to the customer. It also sets a precedent for the next time that their invoice is past due.
Make Invoices a Priority
The cash flow is one of the most important aspects of any business. It allows an owner to pay their employees, market and pay vendors in a timely manner. But if you’re invoices aren’t a priority, you’re always going to come up short. You should get out invoices within one day of getting a product or service out to your customer. To ensure that payment is received timely, you should do this via email or fax. Remember, the faster that your customers receive the invoice, the quicker they can make payment.
Don’t be afraid to think outside the box when it comes to financial terms. In addition to offering discounts to early paying customers, set a late fee to those who go beyond the normal terms. If your net terms are 30 days, let them know that anything beyond that will be subject to a 1.5 percent late fee. You may also want to include padded fees such as shipping, special delivery and fuel surcharge fees. If you have customers who order the same products regularly, you can offer loyalty reward programs. At the end of the month, customers who have purchased a certain percentage can take advantage of additional discounts or credits applied to their next order.
For small businesses, invoicing is a constant thorn in their side. Although the invoices reflect that your cash flow is extensive, it doesn’t become useful until your customers actually pay. The above tips can help you handle your finances in a fast and positive manner that allows you to form relationships for years to come.