Receiving late payments for your services can have devastating consequences on your business finances. As a company, you spend money providing your services to customers. Therefore, you depend on people paying you for these services to maintain a positive cash flow. When customers don’t pay on time, you end up in a situation where there’s money leaving your business and very little coming back in.
Thankfully, it is possible to prevent late payments, ensuring that your customers are always prompt and ready to pay up. Here are three ways you can do this:
Check your customers
Customers will look at many different businesses before choosing yours, but that doesn’t mean you should instantly accept their business. Instead, check your customers to be sure they’re in a good financial place to pay for your services. The easiest way to do this is by running a credit check. Do they have a poor credit score and a history of missing payments? If so, can you really trust them to make prompt payments for your services? Ideally, you should only do business with customers that you can trust to pay you on time. A simple credit check can save you lots of stress later down the line.
Use invoicing software
Writing up manual invoices is a recipe for disaster in the modern age. Firstly, you need to remember to create every single invoice for every single customer, meaning a lot of the late payments could be down to your own admin errors. Instead, business invoicing software lets you automate this process, creating and sending out invoices as and when they’re required. Additionally, the software can help you keep track of who has paid – and who hasn’t – sending out further reminders to encourage people to pay you. Effectively, using this type of software will help you send invoices out on time, display exactly how much is owed and by when, and allow you to continue sending automated prompts until the balance is paid.
Offer numerous payment options
Sometimes, invoice payments are delayed because a customer doesn’t necessarily have the means to pay them. Well, they technically could, but not in the manner that’s stipulated on the terms. For example, if you only accept cash payments, you should prepare to see late payments. It can take time for a customer to get the money they owe in cash, delivering it to you. Instead, if you offered the option of debit or credit card payments, money can be in your accounts in minutes. Always let people pay by credit card as this is the quickest way for a lot of customers to access the funds needed to pay what they owe. If you only offer one payment option, you have to expect delays as not everyone will be able to pay via that method right away.
Just like that, you have prevented late payments from customers. Well, it’s hard to truly prevent 100% of late payments, but these tips will help you see a reduction in how many customers are late. As a result, you should enter a positive cash flow and have fewer financial issues to worry about.