This guest post was provided by Eleanor Wyatt of Remote Work Wellness.
In a survey by the Federal Reserve Banks, 78% of small businesses in the U.S. experienced lower revenues in 2020. Small companies that have cash flow problems are more likely to struggle with paying their vendors late, and companies that invoice small businesses may also experience disruptions due to late payments. If your business invoices small companies, below are some strategies to help manage late payments without damaging existing customer relationships.
Offer Incentives for Paying Early
To prevent many late invoices from piling up in your accounting department, use incentives or customer loyalty programs to help entice your clients to pay early or on time. Consider offering discounts for early payments or consistent on-time payments to give your most loyal and consistent customers a reward.
Keep Accurate Records in Invoicing
Next, consider using invoicing software to streamline your books. Cloud based invoice software could help you get paid faster. Clients can log in to their account and pay online via the invoice, schedule recurring payments, and get alerts. You can also set it up to give your team alerts when your clients view and pay their invoices.
Provide Various Payment Options
Your clients may also prefer having more options for making payments. Avoid archaic payment systems like mailing a paper check. Offer clients electronic payment methods, such as credit card, bank account, PayPal, Venmo, or even Bitcoin.
Require Deposits for Large Invoices
If you have a large contract, require a deposit to your business bank account to get started on the order or work. This can help you cover some of the expenses of the project and prevent you from having to invoice the entire cost.
Write Clear Contracts
Companies may also help prevent some late payments that are due to misunderstandings. Be sure your invoicing contracts are clear and to the point. Rewrite your contracts to clear up any potential confusion.
Be Selective When Choosing Customers
If you’re getting consistent late payments, you may need to do a better job when screening your customers. For big-ticket items or contracts, conduct credit checks or more thorough vetting before agreeing to take on a new client.
Have a Heart
Your team also needs to have discretion when emergencies happen. If a loyal client is having a temporary problem that makes their payments late, be understanding to maintain a positive customer relationship. If the problem persists, you can start to take more actions to collect.
Train Account Representatives to Prioritize Relationships
Businesses should also focus resources, time, and personnel on training account representatives and any other staff members who deal with your clients. Focus on motivating your team to build stronger relationships with your clients and bring in more revenue. Keeping your employees happy and motivated helps maintain more consistency with your clients.
Avoid Harassing Clients
Avoid at all costs is resorting to customer harassment for debt collection. Debt harassment is also prohibited by law. Sending multiple emails, texts, and letters to your client demanding payment may do more harm than good.
It can be frustrating for your company’s financial health if you have late-paying customers. Use these tactics to increase the chances of timely payment and improve your relationships with your clients by making paying early rewarding, more convenient, and organized.
Guest blogger Eleanor Wyatt created Remote Work Wellness with a singular mission: to help those who have started working from home regularly. Her website provides a wealth of carefully curated resources designed to help this growing workforce focus on their physical and mental health.
It is our pleasure to help other companies post their material if we feel it supports our customer base.
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