As an Entrepreneur, it can become really stressful to follow-up for payments. Be it a products business or a services business, it is extremely important to receive payments, on-time. Timely payments are essential for achieving the desired outcome from the business. Payments are the cornerstone of a stable, growing business. Getting paid on time has to be balanced well with profitability and number of clients. One has to have a decent number of clients to sustain the business in the long run. To ensure that most of the clients are making timely payments, can be a tedious task. Late payments can be a big deterrent to a healthy cash flow, thus affecting the growth and expansion of the company.
Here are some tips to follow up for payments in a timely manner and get paid on time:
Have a Payment Policy
A payment policy must be defined for each client, depending upon the relationship one has with that particular client. This policy must have the terms and conditions of the delivery of goods along with the due date and other payment terms. All these details must be added to each invoice before being sent out to the client.
Understand the Credit History
While dealing with any client, it is important to understand their financial strength and credit history. If a client has a good payment track record, it is not important to follow-up for payments, multiple times. In such a scenario, it is advisable to be patient with the client, who is most likely to pay you on the due date.
Gentle Reminder Mail
The first follow-up for every client must be in the form of a gentle reminder mail. This should go out 1 day before the due date of the invoice. Automated reminders can be set using a suitable online invoicing solution like Invoicera.
If the payment is made after the first reminder mail, then there is no need for any other follow-up. However, If the payment is not made on the due date, then a follow-up call, 2-3 days after the reminder mail, must be made. This helps in understanding possible reasons for the delay and getting the client to pay up as soon as possible. Regular follow-up calls are essential for clients who delay payments quite often.
Early Payment Discounts
This is another innovative way to follow-up for clients. Early payment discounts help in building strong relationships with the client. One can train the staff member to offer an early payment discount on a follow-up call, a week before the due date.
Training Of Sales Personnel
It is important to train the sales personnel and account managers for payment follow-ups. As a business owner, you cannot be involved with the day-to-day activities of the business. The teams must be educated for communicating with the client effectively. They should be able to achieve their payment targets, while building a strong relationship with the clients.
Follow-up communication can be used as a medium to make the client aware about the benefits of making on-time payments. These can include early payment discounts, better price and priority delivery etc. Similarly the clients must be communicated about late fee and interest penalties associated with late payments.
Always speak to the client in a positive tone. Go out of the way to help the client and make sure he is completely satisfied. Having a one-on-one communication with the client, on a regular basis, helps in gauging the satisfaction level of the client.
Access To Billing Statements
Sending out billing statements to the client, along with a gentle reminder of the past dues is essential for keeping the payment cycle short. Giving access to such statements through a self serving portal is also useful in saving time and resources.
‘Thank You’ Message
A happy client-vendor relationship is the key to timely payments. Sending out ‘Thank You’ messages once the payment has been made, helps foster this relationship. This could also be a personalised call from a sales personal, acknowledging that the payment has been received.
It is the responsibility of every business owner to ensure that payments are flowing in on time. Following up up with clients must be strategised in such a manner that each client takes you seriously and ensures timely payments. At the same time, quality services and happy relationships help in timely flow of payments.