As a small business owner, it’s essential to get paid by customers on time so you can keep your business running. But it can be hard to stay on top of your finances, especially when customers aren’t paying. To deal with this problem and avoid having to call collection agencies, consider rethinking your systems and approach to protect your business and its cash flow.
Prepare a contract
Every client should sign a contract upfront, whether they are a small business or a parent at your child’s school. A business contract will protect both parties by spelling out exactly what is expected of each of you, the scope of the work, and how and when payment will be made. Here you also need to include the terms you have agreed on so that all parties know where they specifically stand.
Put your banking details everywhere
Make sure your customers know exactly how you want to get paid. Full banking details and options should appear on your invoices and quotes. This should include your international banking details (IBAN), your bank identifier code (BIC), and your PayPal, SnapScan or EFT details. Make it as easy as possible for your customers to pay you because any friction will likely cause them to stall.
Follow up by phone
For bigger invoices, give a courtesy call a week after sending the invoice to make sure it was received and to make sure there are no problems. All sales invoices are important and should be paid on time, but the bigger ones should be treated more personally. People will be less likely to avoid payments if they have a personal relationship with you. They may even prioritize your payment to avoid letting you down or taking an awkward call with you. Calling early also ensures that payments are not overlooked accidentally.
Another tip is to remember that when calling many customers, keep a call log with their feedback so you have quick access to what you discussed the last time. This will keep the conversation relevant and will show a personal touch.
Get the date right
When possible, don’t wait until the end of the month to send out invoices. Rather send them out right away while you are still top of mind. The best date to send your invoice is the last day of the previous month so it fits in well with your creditor books for the month prior.
All too often, payments are late because you have forgotten to send out the invoice on time or the invoice contains errors. This isn’t necessary in today’s world where digital tools and accounting software can automate this tedious process. These systems will also send out reminders to you and your clients and can be customized to suit your business’s specific terms and needs.
The bottom line
Getting paid on time is both a system and a state of mind. So make sure you have the right mindset for managing your invoices so that your cash flow runs smoothly. By implementing this kind of efficiency into your business, you will help keep your clients happy and hopefully avoid any discrepancies down the line. Ensuring you get paid in full and on time.