One of the most important things that you can do when you send out your invoices is to include a due date of when you expect the payment to be made. When the payment isn’t made on time, your company suffers a cash flow problem, which can hurt your reputation in the business and financial communities of the marketplace.
Let’s look at some secrets that can help you to avoid having to chase the payments which are due and that will encourage your clients to pay promptly.
Send Invoices Promptly
Once your product has been sent or the service that you provide has been finished, you should immediately send the invoice to your client. Be sure to affix the date that the payment is expected and track how the invoice is handled by your customer.
Make Terms of Payment Clear
In order to document all of the transactions for your business, you should make the terms of your client’s remittance as clear and concise as possible. It’s imperative that you have a contract that states the payment terms and the results of non-payment or late payment instances. You’ll want to have the client sign this contract along with you so that you are both sure of the terms and that you both agree to them with evidence of signatures.
Do Credit Checks Before You Extend Credit
Remember that you’re running a business, not a bank, so you should perform a credit check on any client before you allow them to receive goods or services on an invoice basis. They may have 10, 30, or 60 days to make their payment, depending on the status of their payment history. Remember that banks don’t give credit without checking the credit history of their clients, and you shouldn’t, either.
Always Follow Up Invoices
You may want to assign this duty to someone other than yourself in your company, but each invoice must be tracked so that problems can be handled quickly and efficiently. Let your customers know that an invoice isn’t a suggestion for payment; they are official documents that require immediate attention and payment. Make sure that you have a policy in place for chasing invoices and penalising late payments when necessary. You do have the right as a business owner to charge interest or a fee on late payments, but understand that you may be hindering the chance for additional business from the client if you do attach fees to late payments.
Establish Effective Communication
Just because a payment is late doesn’t necessarily mean that a client isn’t going to pay; you don’t know what might have happened at their company to cause a delayed payment, so don’t jump to conclusions. It’s best to phone them to ascertain what the problem is and how you might assist their prompt payment. A good recruitment finance company can handle this chore for you if they are partnering with you and helping to maintain a steady and positive cash flow for your business. You’ll be paid for the invoice, and they will track down the payments to determine what the cause for the delay is.
Using these few tips can help you to maintain a healthy financial relationship with your clients. Doing business with your clients can be a successful venture, especially when all payments are paid to you on time.