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Faizan
Every business relies on fast and accurate payments from customers for their products and services to ensure a reliable cash flow. So what can you do to ensure that you get paid for your products / service on time?
1. Charge Upfront
If possible always ask for payment up front. This isn't always possible in today's climate, however you could offer incentives to paying up front such as a reduced rate for your product / service.
2. Be Quick to Respond
As soon as a client falls behind with their payments, pick up the phone and call them. If they tell you that they are unable to pay then arrange new payment terms immediately and ensure they stick to them.
3. Give them some choice
You should offer your client as many ways of paying as possible - credit card, online payment, direct debit, cash, cheque or BACS. Some clients may be favourable to credit card payments as a way to build up reward points for example.
4. Stick to your terms
Many small business owners do not want to chase overdue payments in case they upset their clients, but getting paid is crucial to your business' success and as such you need to enforce your trading terms. If they are set as 7 days ensure you enforce this with a polite phone call. Remember there is no point having trading terms if you do not enforce them!
5. Scheduled invoices
If you send out your invoices on a monthly basis, ensure they go out on the same day each month. As a result your clients will expect to receive the invoice on that day and will hopefully be prepared and ready to pay as part of their regular schedule.
If you sell products, send out the invoice with the product and follow up with an end of month statement.
6. Be realistic
Don't kid yourself that you can afford to let payment terms slide. You cannot afford to keep clients who cannot pay! This only serves to deplete your cash flow.
7. Grace Period to Complain
Ensuring you get paid for your services shouldn't be a nasty process. So on any invoice you should state that the client has a set period of time (no longer than seven days) to dispute the invoice and that this should be done in writing.
8. Be firm yet fair
If a customer is having difficulty in paying their invoice in time it is best to be sympathetic and work out an arrangement that suits everyone in an amicable way.
9. Collection Time
If you have exhausted all methods of ensuring payment and you are getting nowhere then look to employ a collection agency. It's better to receive at least some money for your product / service than get nothing. However wait about three months before employing such a tactic as you might find their circumstances might improve.
10. Credit Check Them
Whilst the points above are useful tips to ensuring you do get paid on time, the most reliable method is to check out your clients before extending them credit. Use a company credit report from the likes of Creditsafe to ensure that your client is creditworthy beforehand. You should do this even if they are a long standing customer as they may not be that forthcoming especially if they are experiencing difficulties. Contact Creditsafe today for a free company credit report on any UK company.
1. Charge Upfront
If possible always ask for payment up front. This isn't always possible in today's climate, however you could offer incentives to paying up front such as a reduced rate for your product / service.
2. Be Quick to Respond
As soon as a client falls behind with their payments, pick up the phone and call them. If they tell you that they are unable to pay then arrange new payment terms immediately and ensure they stick to them.
3. Give them some choice
You should offer your client as many ways of paying as possible - credit card, online payment, direct debit, cash, cheque or BACS. Some clients may be favourable to credit card payments as a way to build up reward points for example.
4. Stick to your terms
Many small business owners do not want to chase overdue payments in case they upset their clients, but getting paid is crucial to your business' success and as such you need to enforce your trading terms. If they are set as 7 days ensure you enforce this with a polite phone call. Remember there is no point having trading terms if you do not enforce them!
5. Scheduled invoices
If you send out your invoices on a monthly basis, ensure they go out on the same day each month. As a result your clients will expect to receive the invoice on that day and will hopefully be prepared and ready to pay as part of their regular schedule.
If you sell products, send out the invoice with the product and follow up with an end of month statement.
6. Be realistic
Don't kid yourself that you can afford to let payment terms slide. You cannot afford to keep clients who cannot pay! This only serves to deplete your cash flow.
7. Grace Period to Complain
Ensuring you get paid for your services shouldn't be a nasty process. So on any invoice you should state that the client has a set period of time (no longer than seven days) to dispute the invoice and that this should be done in writing.
8. Be firm yet fair
If a customer is having difficulty in paying their invoice in time it is best to be sympathetic and work out an arrangement that suits everyone in an amicable way.
9. Collection Time
If you have exhausted all methods of ensuring payment and you are getting nowhere then look to employ a collection agency. It's better to receive at least some money for your product / service than get nothing. However wait about three months before employing such a tactic as you might find their circumstances might improve.
10. Credit Check Them
Whilst the points above are useful tips to ensuring you do get paid on time, the most reliable method is to check out your clients before extending them credit. Use a company credit report from the likes of Creditsafe to ensure that your client is creditworthy beforehand. You should do this even if they are a long standing customer as they may not be that forthcoming especially if they are experiencing difficulties. Contact Creditsafe today for a free company credit report on any UK company.
Posted in: business
