Cashflow management is a top priority for most business owners, and certain trades make the whole affair a lot easier for some, the lucky few who need not worry about delayed payments for their services or products are paid for immediately. But if your business operates on a deferred payments scheme (as most do), finance managing becomes slightly more complicated while you patiently wait for your customers to pay their overdue invoices. Here are a few tips to ensure you get paid on time as much as possible.
Select your credit terms carefully
When it comes to credit terms, there is, unfortunately, no one size fits all design that will work for all of your customers. If you deem it easier to offer the same credit terms duration to your entire customer base, it is primordial to ensure that these terms are clearly explained from the very start so that payers can start to organise their payment runs. If you can afford to modify the duration of terms based on the profile of each customer, then be sure to discuss them carefully with the buyer so that you can come up to an agreement that works both ways – longer terms may work for them but place your business in a tight financial situation while you wait for the payment to be due. Ensure the terms are realistic both for you and the customer and that they will be able to pay you on time based on your efforts to provide them with the required terms.
Be timely yourself
The most cited reason for a delayed payment is organisation: The invoice was not received, it was lost, it came in too late to be cleared for payment, etc. These things do happen, more often than not, but there are ways to get around the issue of bad organisation. Invoice your customers on day 1 so that you know when to expect the payment and can plan adequately. Emailing invoices will ensure that they do not get lost or delayed in the mail, and there are various tools at your disposition to ensure they have been received and read. They will also prove easier to reissue than paper copies and can prevent further delays.
Remind your customers of an upcoming due date with a friendly email, making sure it is courteous and does not give them the impression of being chased for a payment that is not yet technically due. A reminder the day before the due date will ensure that your invoice is at the forefront of their mind and could make the difference between a payment on time and an account in arrears. Same thing goes with an overdue payment, react quickly and remind the customer that their payment was not received on time – the longer you wait to let them know the later their payment (and most likely all future payments) will be as they will not feel the sense of urgency that you might be experiencing. You may soon realise that some companies simply will not pay until they are being chased for the payment, so get in there as early as possible to ensure your business is not impacted by late payers too often.
Access extra cashflow
Relying on customers’ payments to ensure things run smoothly for your business can be stressful, and if there is one thing you probably need less of it is stress. At Capital on Tap we made it our mission to help businesses like yours have access to extra cashflow when they most need it so that late customer payments do not jeopardise their entire business. With a Capital on Tap account, you can transfer funds directly into your business account to fill in the gaps while you chase your customers for late payments. Even better, with the Capital on Tap Business Card, there is no interest on card purchases for up to 37 days when you pay your balance off in full each month. This means that you can use your card to purchase your stock or equipment and pay it off once your customers have paid you back at no extra cost!
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