Not Paid On Time?
A successful business owner must juggle multiple priorities to provide excellent products and services. Inevitably, you will not be paid on time by customers and clients. Therefore, using an efficient system to collect payments while providing clients and customers with a good experience is critical. How you deal with these situations will affect the success of your business and its ongoing relationships. So, what are you to do when clients don’t pay you on time? Here are some strategies to help you manage this difficult situation.
Work Smart When Invoicing
Take advantage of technology when addressing the financial needs of your business. Invoicing clients through automated software makes the entire billing process much simpler and more manageable. Software programs process payments in seconds and can accept many payment methods without as much hassle. Invoicing software also acts as a fail-safe in case you forget to bill clients or would rather avoid contacting them repeatedly.
You Need a Process
For invoicing to work effectively, you’ll need a consistent system. Effective invoicing and collections will also make your business income more predictable. An invoice template saves a tremendous amount of time between each order/client and makes it easy to add corrections or change details for future invoices. If you need to include images or illustrations, use a PDF compressor before sending the file. This simple approach lets you drop in the file, select the new size, and save in seconds. Better yet, consider a free system like Zoho Invoice, that is, yes, $0.
The terms of payment described to clients on invoices or other materials should be fair, consistent, and legally sound. This type of communication with customers is essential beforehand so they understand the terms and won’t misunderstand.
Addressing Late Payments
Having a premade message prepared to send to clients who pay late is a must. You can partner with a professional marketer (or your internal team), a business lawyer, or someone skilled in customer service to create a message that reminds and reassures your customers without alienating them or using legally inappropriate language.
If you speak to clients in person about bills, be sure you or your representatives are polite to clients. Present the missed payment as an opportunity to check on them rather than a harmful deed on the client’s part. Messages regarding overdue payments should be positive and constructive. Above all, leave clients feeling eager to keep doing business with you.
Encourage Early Payments
Getting clients to pay on time, or simply earlier, should be a proactive process and not a reactive one. Making clients want to pay you early typically involves an offer of a discount, a waived late fee, or special perks the client will see as beneficial. Of course, the ultimate goal is that the client incorporates paying you early into their own process to receive consistent benefits. Ensure your business is set up to offer appropriate incentives without significant costs. Better yet, if you provide recurring services, consider setting up monthly ACH (Automated Clearing House = online bank transfers) from the client’s bank account to yours. A monthly ACH may eliminate invoicing altogether. We further recommend that the ACH occurs before the services are performed near the 25th of the month.
Invoicing Is a Balancing Act
When collecting payments from your clients, make sure to do it in a way that makes them feel good and encourages them to do it on time consistently. Use a template and invoicing software to simplify the billing process and reduce errors. If you follow the suggestions above, you minimize the risk you will not be paid on time by customers and clients. To learn more about accounting practices, software, workflow, and solutions that will make your business more financially stable, check out continuing professional education seminars from K2 Enterprises.
If you work in accounting or finance, K2 Enterprises provides continuing education programs to enhance your skills and credentials. Need help learning how to solve your business’s accounting technology needs and selecting the right software for accounting or CPA Firms? Visit us at k2e.com, where we make sophisticated technology understandable to anyone through our conferences, seminars, or on-demand courses.