It can be uncomfortable to navigate the issue of late payments by your clients, but it is a common issue faced by businesses across the globe. You’ve built relationships with your customers, worked hard on their behalf, and met all of the agreed deadlines, only to find a few days or weeks past the due date that they have not yet paid for your service.
Here are our top five ways to speed up invoice payments:
- Consider an incentive: perhaps a small discount or special offer if your customer pays their invoice in full before the due date, otherwise known as a prompt payment discount. This is a proven strategy of getting customers to pay on time. Just 1-2% is enough to elicit timely payments, which will keep the relationship between you and your clients strong.
- Consider a small penalty or late fee if your customer is late with their payment. As with the incentive, just 1-2% is often enough to incentivize a client to pay on time. Be sure to put this in your contract before work begins, so that your customer is aware ahead of time that this fee can be accrued if they are late to pay!
- Make payment as easy as possible. Here at Invoice Tracker, we have partnered with Stripe for easy, online electronic payments. This is the most convenient method for your customers, saving them the hassle of searching for payment details, and the service is available 24/7. Consider also setting up a recurring payment cycle, enabling easy payments which are always on time.
- State your terms in writing: have your client agree to your terms, and include things such as due dates, penalties and incentives, acceptable terms and methods of payment, how you bill your time, your fee(s) and any additional fees, and a timeframe of when the payment is expected. Make your invoice clear and easy to understand, preventing any confusion which may lead to late payments. It may seem paradoxical, but shorter payment terms get you paid faster. Remember: a strong service provider-customer relationship is crucial to building your base and client loyalty.
- Organise and follow up. Send reminders a few days before the due date, via email or phone call. These can be automated and should be gentle reminders which are clear in their details for due dates, payment methods, and incentives and/or penalties. Remind the recipients of any incentives offered for timely payment, and take the time to thank them for their service and build a rapport. This strategy also establishes relationships with your clients, building trust and making for a stronger connection, which will help to ensure that you get your money faster.
Automating your accounts receivables is a great way to save time and improve your cash flow.
Invoice Tracker by eBillity offers a free 30-day trial – it sends automatic email reminders so your invoices are top of mind improving your chance of getting paid faster. It also syncs automatically with your accounting software like QuickBooks or Xero, so once a payment is made, the emails stop, take a look and see if this is right for your business www.invoicetracker.com.