Show Me The Money – Tips to Help You Get Paid on Time
One of the many things I love about KashFlow, as a business, is that the billing side of things is totally automated. So we don’t have to chase customers for payment.
I’ve been involved with businesses like that before and it can be really exhausting. So here are some tips to help you get paid on time by your customers.
1) Issue Invoices promptly
Make sure that you invoice your customers as soon as possible; the sooner you send your invoice, the sooner you receive your money. Delaying all of your invoicing until the end of the week or the end of the month only delays the money getting into your bank account.
2) Confirm receipt of Invoices
A couple of days after you send an invoice, give your customer a friendly phone call to ensure that the invoice was received and that they are aware of the due date.
There’s nothing worse than chasing a late payment only to be told (truthfully or otherwise) that the invoice was never received.
3) Monitor late payments
Make sure you are aware of all unpaid invoices and know as soon as they become overdue. If you only check for invoices that are overdue once a month then you’re causing a delay yourself.
The KashFlow software helps here as it will notify you when an invoice becomes overdue.
4) Deal firmly, fairly and quickly with late payers
Don’t be embarrassed to ask for payment. Be assertive about collecting what’s owed to you; after all, it is your money.
The first thing you should do when an invoice becomes overdue is to contact the customer. It’s not a nice call to have to make, but don’t delay it.
Sometimes it’s easier to have someone else in your company (your other half perhaps if you’re a one-man band) make the call. You then don’t have your working relationship getting in the way.
The customer may say they simply can’t pay at the moment as they don’t have the cash.
You now need to make a judgment call. If you give them enough time to try to pay you then you may well get paid and keep them as a loyal customer due to being so understanding.
On the other hand, they may well go out of business and you’ll not see a penny of what you’re owed.
There’s no right or wrong approach. It depends on a number of factors including how important the customer is to your business and their previous payment record.
A compromise can be to agree to take a part payment immediately and give them time to settle the balance. If you do this then make sure you agree a date for the balance to be settled and that you chase them for payment on the agreed date.
5) Reminder letters
Sometimes you wont be able to contact the customer by phone and will need to email or write to them.
KashFlow can generate reminder letters automatically for you. The first is a friendly letter to your customer; the second is a more formal reminder; the third is a Final Notice of Demand.
6) Be ready to take payment
You may well get the customer to agree to pay you all or some of what is owed. If they offer to pay by cheque, be aware that this could be a stalling tactic. You could end up back at square one if the cheque doesn’t arrive.
If you are set up to take credit card payments, then try to take a card payment over the phone. If you can’t take card payments, then look into it as an option.
A number of card processing companies integrate with KashFlow so that you can take a payment from within your accounting software.
7) Be consistent
If you follow steps 1 and 2 above, then you will less often need to follow the other steps. Remember the old saying that prevention is better than cure? It’s better to consistently follow steps 1 and 2 and ensure you’re paid promptly than it is to have to spend time chasing late payers.
8) Play fair
Customers paying late are a real pain. So don’t forget that you are a customer too. If you expect your customers to pay you promptly, then make sure you pay your suppliers promptly.