One of the largest concerns for business owners is collecting payment from clients. Whether it’s customers running long-overdue balances or a client that consistently disputes what he owes, not getting paid can be very frustrating because it disrupts your business’s cash flow.
In the modern economy, clients are much more likely to pay (and pay on time) if a business offers more payment methods and removes possible barriers to payment.
Below are seven recommendations to help you receive payment from your clients.
1. Flexible Payment Type
Virtually everything we do is online. Why should payment for services be any different? While some clients use the traditional check to make payments, most prefer to pay by credit card or other online payment system, such as PayPal, EFT or Venmo. Providing different options gives clients a reason to pay you on time.
2. Automate Invoices
Using snail mail to send invoices takes too long and opens up the possibility of the invoice getting lost. Automating the process through accounting software gets the invoice to the client quickly and provides easier access to view and pay the bill.
3. Incentivize Quick Payment
A small incentive can reap big rewards for clients that have trouble paying on time. For example, a small 2% discount of the total invoice on early payment may entice clients to place you at the top of their list when it comes to paying their bills.
4. Send Reminders
Sending friendly reminders to clients can draw their attention back to an outstanding invoice. It’s also good practice to send reminders that their payment deadline is close or has arrived. Many clients will appreciate the heads up.
5. Automatic Charge
Having a system that automatically charges clients when work is complete can take a lot of the hassle out of standard invoice billing. It ensures that you are paid and eliminates the stress of remembering when and how much clients need to pay. Remove the barriers for you and your client.
6. Penalize Late Payment
Incentivizing early payment is a useful tool to make sure you are paid on time, but penalizing late payment can offer a similar benefit. Even if the penalty is relatively small (e.g., 2% fee to invoices not paid in 7 days), the amounts can really add up for a client that is habitually late on payments. This can be a great method to entice clients to get their bills paid accurately and on time.
7. Upfront Payment
A nearly fail proof way to ensure you’re paid on time is to request upfront payment. Like instituting an automatic charging system, requiring payment before you perform the services can remove a lot of the extra work that comes with invoicing and paying those invoices.
There may not be one magic answer to ensure that you are paid on time, so consider trying out these different tactics to see what works best for you and your clients. Everyone has bills to pay, and we all know how draining the process can be – both financially and mentally. Take the barriers out of the payment process for your clients and be flexible with how they may make their payments. This can help resolve one of the largest concerns for business owners. Contact Favret Carriere Cronvich to discuss your case.