One of the best ways to improve business cash flow is to work on improving the payment cycle. The right payment terms are crucial for getting paid on time.
Cash flow is the migration of money into or out of the company in a given time period. In today’s economic environment, cash flow is vital for operating a business. It ensures the company’s growth and makes it more appealing to the investors. One of the main concern of managing a steady cash flow is timely payment of invoices by clients. Ordinarily, after issuing invoices, most companies don’t get paid upfront for their services but to maintain a positive cash flow, it is important to get paid, quicker.
Here are 5 tips:
Keep A Short Payment Term
An on-time delivery of a project deserves an early payment of invoice, but giving the freedom to the client, to pay up late, naturally delays the payment. It gives the client, time to overlook the invoice. The payment term should be short and enough to get the customer to stay alert. These create the right sort of mindset for the customer to pay up on time.
Add Interest On Overdue Payment
It’s been noticed that invoices without additional late fee results in delayed payments. Usually a client does not pay the bill on time, unless a sense of urgency is created. Adding an interest or a late fee on overdue payment, encourages on-time payment and makes the client pay before the deadline to avoid additional amount. One should clearly state the conditions of late fee so that the client understands them properly and pay accordingly.
Don’t Use “Due Upon Receipt” In Invoice
Invoices with “Due Upon Receipt” are more likely to suffer delay in payments. “Due upon receipt” does not state the deadline for payment and provides the flexibility to clients to pay anytime. NetX (X is referred as number of days) invoices clearly notify the number of days within which the bill needs to be paid and gives the customer time to react. Adding an additional line that clearly states the deadline is helpful.
Send Out Reminders
A simple way of getting paid on time is sending out friendly reminders to clients. Giving a certain amount of time for the payment may cause the client to forget about the invoice at times. Prior to the deadline of invoice, one should email or SMS the client to remind him about the pending invoice. Sending out reminders also gives an opportunity to the owner to up-sell his products and services.
Be Good With Your Customer
Customers are likely to prioritize the payment if they sense a good relationship from the company. With keeping the value of satisfying customer relationship in mind, while invoicing, good etiquette and minding manners can be helpful for getting paid in a timely fashion. Thanking the customers for their business and adding the word ‘please’ before payment time-line help to reduce payment delays and let the customer know that the company keeps their interest as its priority. In order to further strengthen the customer’s relationship with the company, one may provide certain discount on early payment of invoice.
Numerous companies experience the aspect of late invoice payment on a daily basis, however, there are various ways to accelerate the process. Streamlining the invoice process is necessary to stay competitive in the business world. Getting paid on time is greatly determined by the ability to make customers happy with good services and quality relationships. using tools like Invoicera help with a host features to help you get paid on time.