5 Ways to Entice Customers to Pay On Time

Cash flow issues are among the biggest reasons small businesses fail. When customers pay late, it can have a snowball effect and cause further delays in paying your own expenses, which can hurt your credit and create unnecessary stress. Collecting payments on time is a critical component to the ongoing success of your company and therefore it’s something that you must make a priority. The good news is there are five simple ways you can entice your customers to remit on time or even early.

1. Schedule Automated Billing – Having to manually track down late payments can be a job in and of itself, and probably something you don’t have time to do. Set up an automated billing system that notifies customers when a payment is due, then automatically sends follow-ups each week until the payment is received. This will take the burden off you and keep your invoice on the top of your client’s minds.
2. Find Out the “Go-To” Person – If you deal with other businesses, the fastest way to ensure a timely payment is to learn the name and contact information of the person who handles accounts payable. This way you can go straight to the source if you need to inquire on payment status. As a bonus, if you develop a more personal relationship with this person, they’ll be more likely to put your invoices to the top of their list.
3. Offer a Discount – Entice your customers to make payment early by offering them a small percentage off the total bill if payment is made by a specified date. You may get slightly less than you billed for but knowing you’ll receive it in a timely manner is worth it, especially when you have your own expenses to worry about.
4. Assess a Late Fee – Include a section in your contract that details the percentage you’ll assess for late payments. When someone knows they’ll have to pay more if they’re late, they’re much more likely to ensure their payment is received on time. And you’ll get the bonus of collecting slightly more from those who still pay late to make up for the hassle. (Just be sure to discuss this with a business lawyer first to be sure the amount you charge meets the regulations in your state.)
5. Offer the Option to Pay Electronically – In today’s day and age, technology is becoming a way of life. More and more people are choosing to forgo their checkbook for online banking and electronic payments. Offering this option to your customers can encourage them to pay more promptly, and even better - you’ll have access to the funds quicker.

One of the most important components to succeeding in small business is being able to manage cash flow properly. When money is coming in on time, you can handle your operating expenses more efficiently and your business will run more smoothly. Implement these five simple strategies to help ensure timely payments from your customer and your business will benefit in the long run.

Labels: small business tips