When you have historically allowed your clients to pay for you after thirty or sixty days, you may find it hard to change their habit. Ensure you agree credit terms with your client when you initially set up a merchant account for them to help avoid this issue. Ensure you consider any terms related to late payment fees, interest or even fast payment discounts.
Communicating your conditions and terms to your clients
When you have agreed terms, re-iterate them to your client in writing so they are aware of when you expect them to pay you. It also makes sense to advise them how non or late payments will be addressed. For example , a three-step process may include: sending them a statement immediately their own account falls due; then contacting them after seven days overdue, and then referring them to a debt collection specialist after twenty-eight days.
Be firm – it’s your money!
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Many small business owners are afraid to ask for payment when its due. They allow their customers to delay paying rather than jeopardizing losing clients by appearing “pushy” or too demanding. Be more assertive as your client has already received your service or goods. You’re efficiently working for nothing until your paid – a sale is only a sale when you’re paid. The “squeaky wheel gets oiled first” – make sure you’re the important squeaky steering wheel.
Speeding up slow payers
Have you allowed your clients to pay after four weeks and now you want them to start paying after seven days? Changing their routine make require “baby steps” to improve cash flow.
Contact them much sooner and more frequently than you do previously. Call or email all of them after fourteen days if they’re utilized to paying after thirty days. Let them know your invoice is due and politely request when they will settle your account. Or even start putting pressure on a small earlier. A few days before your bill is due send them a statement and highlight the due date. You could even call them to ensure they have got received your invoice. If your customer can’t (or won’t) pay your own invoice in full consider taking a part-payment and giving them the option to pay in a single or two instalments.
So give it a try – retrain your slow paying clients to improve your cash flow. By making a few small changes to your invoicing processes, you will be able to improve cash flow.