Almost every business owner has experienced the awkward moment of reminding a client of an outstanding invoice. No one takes pleasure in chasing a customer with an overdue bill, but delays in payment reduce cash flow and can negatively affect the financial health of the company.
These late payments can also cause operational headaches that take owner’s away from the more important tasks at hand. By following the four steps below, your clients will surely be more timely with paying invoices and you will have more confidence with reaching out for past due balances.
1.Set clear expectations
The best way to help avoid late payments is by being clear of your business’ payment terms from the beginning. It is recommended to put the payment terms not only on your invoices, but also have verbal discussions with your client and include terms in your contracts. Be sure that you have a clear payment schedule that clients can easily understand as well.
2.Send clients a reminder
When invoices become past due, send your client a friendly reminder as it is possible that your invoice got easily lost in their email inbox. You could also send them a personal message with the invoice attached to make them aware of the outstanding bill. If you feel that the client may be late submitting a payment from the beginning of the transaction, set them up on email reminders when you are creating the invoice.
3.Mail the invoice
If emails or phone calls do not do the trick, it may be time to get old school and try snail-mail. You could even try sending the invoice via SMS text message to attempt to get their attention.
4.Offer promotions and penalties
If your company has quite a few outstanding invoices, it might be best to look into offering incentives for your customers to pay promptly. By offering early payment promotions, this helps ensure that your business runs smoothly and you spend less time tracking down clients. On the other hand, it may be beneficial to implement penalties for past due invoices as this can affect your cash flow. If your business decides to add penalties, make sure you update your contracts and agreements to reflect this new policy.
As you determine which tips will work best for your company, keep in mind it is important that small businesses have strong communication with their customers and are clear with payment expectations. These helpful tips and tricks should help your company produce better results, get paid faster, and reduce the stress that comes with contacting clients for payment.
If you are struggling to get customers to pay on time and need more advice, please contact me today at 310-534-5577 or [email protected] as I’d be happy to assist you!
