No matter the size of your organization, or the type of industry you are in, we all want to get paid for what we provide, much quicker. Getting paid on time or least faster, helps our organization in many ways but where it makes the most impact is on cash flow. Having positive cash flow allows us to do many things and gives us the comfort we need to make sound decisions without the fear of running into issues later on down the road.
Unless you are a retail operation where you get paid before the customer even leaves the store, there probably are not many types of business that get 100 percent of their customers to pay on time. And as a nationwide collection agency that works with all types of business, we hear every reason there is when it comes to late and non-paying customers.
Many can be legitimate reasons such as they did not receive the invoice, or in the case of commercial business, they did not forward it to the proper person in their organization or it wasn’t approved for payment yet.
So how does a business get paid faster?
Clear Payment Terms
When you acquire a new customer, take time to layout any payment terms you have. What those terms are, is up to you as a business but make sure your customer understands how and when you need to get paid. This lets your customers know that you do expect to get paid for your services no matter what, and it should educate them as to the terms you expect on a regular basis. It is also a good idea to remind regular customers of your payment terms occasionally because after a while, they could forget what you expect. Also, make sure your payment terms are on every invoice you send.
We know for some types of business, you can run into seasonal issues with workload, labor and other factors. However, your business, no matter the size, needs to issue invoices at regular intervals. Once your organization starts the cycle of delaying invoicing, you’ll be quickly heading for cash flow issues that will affect your business. Depending on the type of business you operate, put invoicing in your schedule. Even if you have a bookkeeper, make sure it is in your calendar. If you have an accountant on staff, you are probably doing this, but it always needs a reminder.
Accurate Pricing and Estimates
One of the top reasons a business does not get paid is because there is a dispute about either the original pricing or an estimate that the customer disagrees with. This can happen quite frequently in the construction business or in landscaping. Sometimes a customer may ask for something while the crew is on site. Because there could be a lack of procedures for capturing that added work, there then becomes a stand off on what should be paid for. First, have procedures in place for issuing accurate pricing and if you are in a business where work can change quickly, have a system in place so both business and customer can agree on work and any money associated with that additional work. You can use everything from a written contract all the way to software programs that can be stored on a tablet or IPad in the field.
More Than One Way To Pay
If you have ever had any issues with getting paid on time or paid at all, your organization needs to offer more than one way to pay. If you are a larger organization, you most likely have this in place but for smaller businesses, this is an important part of your cash flow strategy. Paper invoices and even email invoices can get lost, or not entered into your client’s system sometimes. Once that happens, you could be without payment for up to 60 days or even more. Have more than one way to receive payment. There are now many options to invoice with email and link to an account and you have other options to accept credit card without even having a physical terminal.
Always Know When To Get Help
Hiring a collection agency to help with your late and non-paying customers is not a bad thing. In fact, it will greatly improve your chances of resolving payment issues, help you get paid quicker and can free up your time, just to name a few benefits. Hiring the right collection agency will also save you money because you’ll get paid in a shorter period of time, improve cash flow and prevent you from having to dip into cash reserves, paying interest on credit lines and other ways to keep afloat.
Find an agency that understands your values, has values themselves and can treat your customers that way you would treat them. Make sure they have technology to make working with them easier on your part and ask them about low-cost collections to make your choice even easier.
You can improve your cash flow no matter the size of your operation. It may take improving your internal systems and getting a little more assertive in your payment process but you can get your customers to pay faster.