If there’s one thing all business owners learn very quickly, it’s that not all clients will pay what they owe on time. And as you grow your business and attract new customers, you’re more likely to have to deal with clients who drag their heels when it comes to settling their invoices.
Of course, some of them will have perfectly good reasons for not paying on time, and hammering them after one late payment isn’t exactly the best way to build a strong working relationship.
But if you let late payments become a habit, it can seriously impact your cash flow and leave you spending valuable time chasing debtors, rather than pursuing new leads.
So, what can you do to speed up payment and improve your cash flow? Let’s take a look at three options:
1. Use the Cloud
Chasing outstanding invoices is often a time-intensive task and one that can distract from more important business matters. That’s why using a cloud accounting platform like Xero can simplify credit control and give you more time to focus on running your business.
Xero not only allows you to quickly monitor your overdue invoices, it can also send automatic reminders once a certain number of days has passed without payment.
2. Offer Multiple Payment Options
Another way to combat late payers is to make it as simple as possible for them to pay you. By giving them a selection of options, you are essentially pre-empting any excuses they might offer for non-payment. It also increases the likelihood of being paid on time if you’re flexible around how to accept payment.
You might even consider discussing a payment plan with a serial late or non-paying customer. However, you should consider their ability to pay what you’re owed, the amount they owe you, and the length of time that they’ve been a customer before entering into this discussion. If they’re unlikely to stick to a payment plan, you may end up chasing them for smaller amounts of money over a longer period of time.
3. Be Proactive
Finally, the best way to deal with late payments is to be proactive. If you can stop them from becoming late or non-payments, you’ll have a greater chance of improving your cash flow.
You can do this by sending scheduled and personalized reminders that a payment is due before it becomes overdue. For instance, if you’re working to a net 30 payment term, you could send a reminder one week before it’s due to prompt a timely payment.
We Can Help
Good cash flow is crucial to the success of any business, and if late payers are threatening to derail yours, you need to intervene. We can help you do just that. Contact us today to speak with one of our friendly team members and find out more about our services.