When you own a small business, one of the most troublesome things is not getting paid in a timely manner. Clients and customers can put off paying for weeks and sometimes months, leaving you to deal with the shortage. Cash flow problems can ruin productivity and good credit. After all, you have bills to pay, too. Here are a couple of ways to get business invoices paid on time.
Offer Multiple Payment Options
Offering your clients different payment options helps them to make better buying choices. If they don’t have the cash to pay it all at once, maybe a payment plan or using a credit card would help. Do also consider offering things like bank transfers or even cryptocurrency as an option to buy from your company.
Ask for a Deposit Upfront
Asking for a deposit (between 10% and 50%) before you start a job for a client means that you will have some capital to work with. This is especially important if the job involves purchasing supplies or hiring third-party services in order to get the job done.
Product orders can be paid in full before shipping, so don’t lose stock without getting paid. It is especially important to get a good deposit for special orders or custom work since you wouldn’t likely be able to resell these items. When you’ve worked with your clients and customers for a while and trust them to pay on time, you can extend credit as appropriate.
Use Legal Contracts and Agreements
Whenever you do work or a project for a client, it’s important to use a legal contract or agreement. People are far more likely to honor an invoice if they have signed on the dotted line. These contracts can be referred to by your attorney an if collections become a legal court battle. Fortunately, you can find some basic legal contract templates online if you can’t afford to have a lawyer write one. I do recommend that you have your attorney take a peek at it to make sure it’s in order, however.
Talk to Your Client
The first thing you can try in the case of late payments is talking to your clients. There may be a legitimate reason why they cannot pay you at this time. You can try to set up a payment arrangement with them to get some of the bills paid. It’s important to stay in contact with them, so they know the seriousness of the debt. They may also feel dissatisfied with your service or product and not want to pay for it. This is where quality communication comes in.
Use a Collection Agency
If you’re tired of working with clients that refuse to pay on time, consider using a small business collection agency so the collection process passes to someone else. This will save you time and money in the long run.
While using an agency doesn’t guarantee that you’ll be paid on time or at all, you will have a better chance than if you did it on your own. Some people have to feel a threat of having their credit affected before they respond. You can also try to send a letter from your attorney before turning over the account to a collection agency.