No business owner wants their cash flow to be inconsistent. You could run into challenges of managing your account if that happens. And this is usually the case when you are dealing with slow-paying clients. You can save yourself the stress of running after some clients for payments.
As a small business owner, all you ever wanted is a timely collection of payments from debtors to run your business smoothly. You are about to discover some ways to avoid late payments from your clients.
5 Ways To Avoid Late Payments From Clients
● Find Out About Your Customers
In some cases, you don’t have the option of choosing your clients, particularly when sales are the bottom line. To be on the safer side, you can engage in research to learn more about your prospective customers. This includes checking for the credit score history, especially when the amount of money involved is enormous.
Never be tempted to agree to business terms with someone who doesn’t have a good credit score history. It is a red flag you should never overlook in business because it might come back to haunt you unexpectedly.
● Define Your Payment Terms
Always ensure your payment terms are stated clearly for customers’ understanding. On your invoice, make it visible for clients to see your credit policy, including the implication of late payments. Choose your preferred number of days, stating it on your bills to avoid future disagreement on payment.
Also, you can add a late payment policy, making your customers know that late payment attracts additional charges. You can set the charges to suit your preference, but ensure it is significant enough to induce your clients to pay on time.
● Alternative Payment Methods Are Advisable
Every customer has a payment method that suits them. So don’t make it difficult for your clients by offering a single payment method. Creating different payment channels and asking your client to select their preferred channels helps you to receive payment quickly.
A better way to do this is to allow for an online payment option, given the presence of advanced technology. Businesses are embracing the latest innovations in the financial industry, including accepting mobile payment, which doesn’t require you to wait for long before getting credited.
● Compensate Early Paying Customers
You can inspire your clients to pay early by declaring compensation if payment is made before the agreed date lapses. Determination of the compensation usually depends on the deal under consideration between you and the client.
However, keep in mind that the discount offered should never affect your business profitability. It is bait to make your customers pay on time. Also, your payment policy must capture that compensation is only valid before the due date becomes late.
● Follow up with your Accounting Records Regularly
If you don’t have one yet, adopt accounting software to keep up with your invoices weekly. With the system available, you can be up to date with payments, including the ones before and after late dates. You can notify your customers before their payments become due. Also, you can send a message to defaulters about their due payments.
What is essential in this situation is you should never be rude to your customers if you want them to respond positively. In fact, it increases the chances that they will pay on time because you approach them politely.
Irrespective of your business type, payment timeliness is an indispensable factor to smooth running and continuity. Many small businesses are finding it challenging to keep their business functioning because of inconsistent cash flow. Incorporating these tips with your business operation can change the outcome for you. Take the step now for a positive turnaround.
Why Choose AWA for Your Transportation Collection Needs?
AWA operates on a contingency fee basis, meaning, if we cannot collect, you owe us nothing. If collection efforts are successful, our rates will be based on how old and how much the debt is, if there is a damage claim, and whether the debtor is in or out of business. If you have unpaid freight invoices and are not sure what to do next, call 662-892-8591 to speak with one of AWA’s client specialists today or Contact Us Directly!
For more information on our agency practices and methods, view our AWA Collection Process Page.