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Cash flow is one of the most critical components for success. However, it is very hard to maintain a good cash flow when clients aren’t paying you on time. It can feel like there is no way out of the problem. After all, you cannot transfer your clients’ money for them. While it is a challenging situation, it is not an impossible one. Read on to discover what you can do if unpaid invoices are mounting up at your business…
- Send your invoices promptly – Clients won’t pay on time if you send your invoices out three weeks late… This sends out the message that you are in no rush for the money, and so clients will put you to the bottom of their to-pay list. Send it as soon as you can!
- Chase late payments – Don’t worry about being a pest! If a client is late making a payment, chase them. Start by sending an email, giving them a friendly reminder that their balance is due, and ask when they will be able to make the payment. If this does not work, you should call the client directly. Emails can easily be avoided, but phone calls are a great way to catch someone off guard, resulting in a more honest conversation.
- Avoid nasty surprises by monitoring customers – When taking on a new client, it is a good idea to run a credit check. This will give you a good indication as to whether they pay their bills on time or not. This can ensure you don’t experience any nasty surprises throughout your working relationship.
- Build a relationship with your customers – You will find it a lot easier to chase payments if you have a relationship with your customers. During the early stages of the relationship, take the time to open a channel of communication. You need to know the processes your customers use, and make it easy for them to process and clear payments. If you have a good relationship with your clients, they will be more likely to pay you on time, and they will get in touch promptly if they are having any trouble paying the bill.
- Invest in a quality payment solution – There are a number of top quality payment solutions available today such as ACH Payment, which are designed to speed up the process. Payment solutions like this will cut out the need for paper checks, which will ensure you get paid faster. You can also avoid trips to the bank, which will enable you to optimise your time in the workplace.
- Offer a number of payment options – Nowadays, people want convenience when paying their bills. Give them several payment options, including the traditional direct bank transfer, as well as more modern options, such as PayPal and other e-wallets. By doing this, you make the payment process more convenient, which will result in you getting paid quicker in a lot of cases.
- Use invoice financing – you can get your invoices paid by a third party, and they will chase your customers. The invoice financer takes on the risk of the invoice not being paid, but of course, you must give them a discount on the invoice value to compensate for the risk. It comes at a price (sometimes a heavy price), but it’s a way of getting the cash in quickly.
If you follow the seven tips mentioned above, you should be able to reduce the mountain of unpaid invoices you have while ensuring you get paid quicker in the future.