Many small businesses depend on customers paying their invoices in a timely fashion. Cash flow is imperative to continue operating and delays in being paid can be harmful to your business. You might end up in court to recoup your unpaid amounts.
Setting up methods to motivate your customers to make their payments on time or perhaps sooner can help. Here is a look at three possible ways to accomplish this.
Provide different methods of payment
Having your customers pay you with a mailed check runs the risk of delays. Your buyer might forget to write and send the check, which could require you to send reminders to your customer about payment. Checks in the mail are also subject to possible delays before they reach you.
Allowing buyers to use electronic and/or online means to deposit money into your company bank account bypasses the use of mail. Your customer may prefer these options and be willing to use them on the same day you ask for payment.
Create pay incentives
Some businesses offer their customers incentives to make early payments. To take an example, your invoice could state that your buyer will earn a 2% discount for paying sooner than the due date. Such incentives tend to work better for larger invoices since customers can reap a greater discount from paying early.
Establish late fees
If there are no consequences for late payments, your customers might not feel any urgency in paying you. Putting late fees in your contract or invoices lets your buyers know that you take delayed payments seriously. Some businesses also include a late payment clause that spells out consequences such as suspending services or goods to the nonpaying client.
Overall, creating precise payment terms may avoid possible litigation. In the event a lawsuit with a nonpaying person or business is inevitable, a well-crafted contract or agreement could establish your rights.