Every business has customers that pay on time and those that pay after the due date. As the business owner you need to make sure most of your customers pay on time, and have a policy that addresses late payments to encourage payment as soon as possible, to ensure your business remains financially healthy.
Ignoring late payments is like granting customers interest free loans, and it can make things awkward. You need to get paid – and you deserve to be paid – but you also don’t want to lose customers over a late payment or two. So how do you ensure you will get paid on time without losing customers? The secret lies in your payment policy and how you communicate that policy to your customers.
You should be discussing your terms and conditions with prospects as you near the closing of a sale. No one wants to lose a customer because you did not make your terms and conditions clear to them. But how do you get paid on time? Here are three steps for helping to ensure you get paid on time:
- Make sure your customers understand your payment terms and policies.
- Create a clear policy about payment terms, and review these terms as part of your sales discussions.
- Provide a written contract that is easy to understand.
- Review the entire contract with the customer before they sign and make sure they can accurately explain your policy.
- Offer flexible payment options and make sure the options make it as easy as possible to do business with you and to pay you (in full) soon after you deliver.
- Start collecting payments early – even starting before delivery.
- Collect the first payment at the time of contract signing or before you deliver the first product or service. Down payments are common.
- Consider offering a discount for early payment. This policy needs to be taken into consideration when you set your pricing.
- Include a clause in your contract that removes discounts or favorable pricing if a payment is delinquent.
- Be proactive about invoicing and delinquent notifications.
- Send invoices so they arrive on time and follow up before payments become delinquent.
- Understand that your contact may not even be aware that the payments are not being made on time, so notifying them may prevent delinquent payments.
- Show progress payments on the invoices so the customer can see when you are receiving the payments.
These are just a few of the actions we advise our clients to take to ensure their business remains healthy and their cashflow stays positive. If you would like to discuss other ways to ensure you get paid on time, give us a call today!