A receivable is not worth very much to your business until it is paid. Your clients most likely have just as many expenses as you, so that is why it is so important that you take the steps necessary to speed up the process and get yours paid first.
The following are five simple steps to help ensure you get paid sooner.
1. Decrease your payment terms
A decrease in your payment terms is one simple way to decrease your waiting time. Many of your clients will wait until the very last day it is due before paying it, so by shortening your credit terms from net 30 days to net 15 days, they will be required to pay it sooner.
2. Request initial deposits to reduce the total amount of credit extended
By collecting some of the money in advance, you will have extra working capital available to keep things flowing until the invoice is paid. Most of your customer’s will understand that you require a portion of the bill early, in order to cover your initial project expenses.
3. Improve your billing efficiency so invoices are generated and sent as quickly as possible
Every modern business needs a system to quickly generate and email out invoices to clients as soon as the job is complete. There are online companies who specialize in customizing templates, storing your client’s billing information and streamlining the invoicing process.
4. Offer client’s incentives for early invoice payments
By offering discount for client’s who are able to pay you ahead of schedule, it will help ensure that you get paid faster. If you encourage them to pay early by offering them a reduced amount, you will have the working capital you need sooner, so you don’t have to worry about accumulating more debt. Rather than pay the bank interest on the credit you needed to keep your cash flow from being drained, you can give your client a fraction of that amount when they send their payment in before it is actually due. Clients will love it and it will keep prevent you from incurring more debt.
5. Send professional reminder notices before an invoice becomes overdue
There is nothing wrong with reminding a customer about an outstanding bill. Sometimes all it takes is a simple well-written note to move your invoice to the top of the pile. By sending a professional and timely reminder, it gives your client a little push to send their payment in sooner. Those are the five simple and effective steps that will shorten the time between project completion and project payment. Your business needs a reliable cash flow in order to function and the sooner that you can get paid for your work, the less you will need to rely on credit. In order to get paid faster, a business needs to negotiate the best terms possible, request deposits when possible, send invoices as soon as possible, offer discounts for early payments and send reminder notices before invoices are due.