I’ll never forget my first credit card bill. I received it while I was in the process of moving, and though I took note of it initially, I promptly put it aside and completely forgot about it. A few weeks later, while unpacking boxes I found it and realized that the due date was the next day.
It was too late to mail a check and I didn’t have any sort of online account set up, so in a panic, I called the credit card company to try and pay over the phone. Though I don’t remember exactly how that phone call went, I do remember that it took a ridiculously long time of being transferred from person to person until finally I was able to speak with someone and complete a payment transaction. To the last person, I spoke out in exasperation, “I’m trying to pay YOU, why are you making it so hard to get paid?”
Without meaning to, many businesses may be doing the same thing–making it difficult for the customer to pay what they owe. When this happens, the real people that are hurt aren’t the customers, it is the business.
Unpaid invoices or late payments can seriously impact a business’ cash flow. They can limit purchasing power, delay payroll, and even eventually lead to the demise of the company. So, why aren’t all companies making it easy as possible for their customers to pay and to pay on time? How can you make it easy for customers to pay you?
7 Ways to Help Customers to Pay You:
1. Be Clear About Expectations and Payment Terms Upfront
There are good surprises and bad surprises. Receiving a bill with an unexpected number on it, is definitely a bad surprise. Let the customer know ahead of time what they should expect the price to be, and discuss any unknowns that could pop-up and potentially change it. Also discuss the terms of payment, i.e. how soon you expect to be paid once the job is complete. Keep the communication flowing throughout until the invoice is sent.
2. Send out the Invoice in a Timely Manner
How can you expect a customer to pay on time if you don’t send them an invoice on time? Sending out invoices immediately after a job is completed will help you to receive payment sooner and help keep your company’s cash flow steady.
3. Offer Plenty of Easy Payment Options
You want the customer to pay you, right? Offer easy payment options. Don’t insist that you only accept hand delivered payments in small change. Accept as wide of a variety of payment options as your business can handle.
Furthermore, take some of the work out of it for the customer. For example, if the invoice is being sent electronically, include a payment link in the invoice. If you are mailing the invoice, include a pre-addressed envelope as well as information about online or over the phone payment. These little things will make it much harder for a customer to put off the task. You don’t want to be waiting on money simply because the customer forgot to pick up envelopes the last time she was at the store.
4. Have a Protocol in Place for Late Payments
Late payments are bound to happen. Perhaps the customer received the invoice, put it aside and forgot about it. Or, perhaps they received the invoice, but are waiting for their next paycheck in order to pay it. Your business should have a plan set up for what to do about this. Business writer Susan Ward explains, “The more quickly you follow up on a missed payment, the better your chance of getting paid.” Even if a customer has a wonderful excuse, you still deserve to be paid.
5. Request Partial Payment Upfront
This might not be a strategy for making it easier for customers to pay you, but it does help to keep your business’ cash flow positive. It is not uncalled for, especially with big jobs, to request a deposit upfront before any work begins.
6. Offer Discounts for Early Payments or Payment in Full Upfront
One way to make it easy for a customer to pay you is by offering them a savings for doing it. You can provide an opportunity for a small percentage discount for paying early, or for paying upfront (if you require a deposit). The idea of being able to save a little money will help to keep your payment at the front of their minds and may even convince them to pay you a little ahead of time.
7. Be Polite
It is amazing just how far being nice and polite can get you. Throughout all of your interactions with a customer, from initial quote to contacting them about a late payment, be courteous. Be respectful of the customer, and depending on their situation and your business, be willing to come up with a payment plan, if necessary.
Now, once you have your payment, it is important to know what to do with it. Contact us at Lumen Advisory and Finance for accounting and financial expertise.