Imagine this scenario, you have a lot of customers, but the cash coming in does not equate to the number of customers you have. Either they are not paying as they make purchases or they are outright debtors.
Now, this is what several small businesses deal with.
You are not in business if there is no cash inflow. Business is not charity. Nothing hurts the smooth operation and growth of a business like slow payment or irregular inflow.
Small businesses are easily affected by cash flow irregularities since they don't operate with big working capital like big companies.
According to research by U.S banks, the reason small businesses fail overwhelmingly includes cash flow issues. With 82% of failures linked to poor cash management skills.
And, this can be directly linked to a lack of understanding of how to get customers to pay faster, dealing with outstanding debts and irregular inflows.
We understand how this hampers your cash flow management as a small business owner and the overall growth of your business.
Hence, we have put up this post to aid your journey on how to get your customers to pay you faster, as this is the only way you keep running your business.
Specifically, we will be sharing 9 tips that work.
Let's dive in!
9 Tips To Get Your CustomersTo Pay Faster
Request For Advance Payment Or Deposit:
There is no better way to minimize cash flow issues than to request an advance upfront or a deposit. Whether you are involved in goods or a service-based business, this is an option that works. Let your customers or clients know this is s your policy. This will get them committed before taking your goods or you doing any work for them.
As a service-based business, it will eliminate cases of you using your business money to carry out a contract without getting any financial commitment on their side. A good way to achieve this is to have a fixed percentage deposit for each transaction. This way your business will not run a cash loss.
Send Bills Promptly:
Don't allow your customers or clients to stall on payment. Be sure you are not the reason for late payment. Send bills as Swift as transactions have been decided. The faster you invoice your customers, the faster you get paid.
This should not be an issue if you use a smart software accounting solution that is automated to send in bills to customers on schedule. Tyms Book is one such software, it sends your bills to customers with an automated invoice.
Note that it is safer to send your invoice as soon as you have finalized details about any transaction.
Incentive For Early Payment:
Here is one tip that you can employ to get your customer's commitment to early payment.
Incentives always work either for staff or customers. It must not be something way out of your budget. You can offer a percentage discount for customers who pay within a specific time.
It could even be preference given to customers who pay early to have access to buy more than the actual money they have. However, be careful not to go overboard, so you don't find yourself in a problem you are trying to avoid.
Enforce Late Payment Penalties:
If there are incentives for early payment, then penalties for late payment should work.
For customers, incentives may not get them to pay on time, but if there is a penalty for late payment, it will get them to pay faster.
This could be charging a certain percentage extra for late payments.
However, let your customers know beforehand that you have such a policy.
Enforce professionalism, and let your customers know you don't condone late payment.
Do you want to ensure early payment by your customers? Say goodbye to paper invoices. In this time and age, there is no better way than to embrace an automated invoicing system.
Bid Good Bye To Paper Invoices:
This system speeds up the process using digital means.
Tools like Tyms Book allow you to send an automated invoice to your customers.
You don't have to go through the trouble of mailing your invoices, the software does the job without you having to step out of your office. Remember the goal is to have your invoice delivered to your customers on time, so your payment time is shortened.
Be Flexible with Your Payment Option
Do you want to get your customers to pay faster? Here is another tip you don't have to joke with—being flexible with your payment option.
Don't be the person who insists on one payment option, be flexible to explore other options of payment.
Technology has eased things for us. Being flexible with payment options means you have different options for your customers to pay you. It means you don't have to insist on cash at hand only, there are various payment options: gateways; payment gateways, bank transfers, and cheques.
Tyms Book as an accounting software gives you the option to integrate your various payment gateways in one place and manage your payments. This way, you leave your customers with a variety of options to choose from.
Don't let your rigidity be the reason your payment is delayed.
How about if I tell you that some customers, even with all the above-listed tips, will stay pay late? This is where reminders and follow-ups come in handy. It could be that your customers might have forgotten, that's why you must employ this tip to remind them of their outstanding payment.
For a customer who is willing to pay, sending several reminder emails will encourage him to pay you.
Beautifully enough, this tip works when you use a smart invoicing system for your business.
Place A Call To Demand For Your Money:
When all remainders sent does not yield result. It is time for you to place a call to demand that the customer pays up within a limited time frame if they are not paying immediately. You need to be firm at this juncture.
This action is necessary for you to know what exactly is keeping your customer from paying.
If you have exhausted all these options, the only thing left is to carry out legal action if you are not willing to forfeit the money.
This is usually the last option and does not end in a cordial relationship with the customer.
Cash flow is not what you joke with as a small business owner. It is the lifeline of your business. Anything that tampers with it, should be checked. This is why you should employ all these tips to ensure your customers pay you faster.
This way you stay out of cash flow issues and allow your business to function seamlessly.
Also, you should understand the different customers you are working with, know those who are not willing to pay no matter the measures you put in place and know when to draw the line.
It makes no sense to waste your money on a debt you will not recover.
Tyms Book provides you with a smart invoicing system and is an accounting software that allows you to integrate your various payment gateways for your customers.
Never lose money because you refused to embrace technology.
I believe this post has given you the answers you need on how to get your customers to pay faster.