Business Finance Tips: How to Speed Up Your Payment Collection
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Published by TOP4 Team
The status of your business finances greatly depends on how efficiently you are able to collect payments from your customers. The longer the payments are delayed, the greater its effect on your working capital and cash flow. Without a steady flow of payments, it can be difficult to make investments, whether it’s to purchase new inventory, launch a project, hire more people, upgrade equipment and other initiatives that bring growth and innovation for the organisation.
There are various reasons why some clients can take a bit more time to pay than others, but there are general rules to help them pay faster and in a more reliable manner. Here are some ways that you can consider to speed up the client payment process:
Communicate effectively. Present your payment terms to your customers in a clear and easy-to-understand manner. Be very detailed and accurate with your words – if there are fees for late payments, state the exact day when this will be applicable and how much charges will apply. Put in into writing and discuss the details early on.
Improve your invoicing system. Some business owners think that invoicing is merely sending out notice after the sale. But an effective invoicing system takes into consideration the demands and needs of both the business and the customers. For instance, making sure the invoice contains complete and accurate details will save you hours of redundant communications and boost your record-keeping capabilities as well. Setting up an automated payment renewal system for recurring clients makes it easy for them to pay and minimises hours of following up and reminders.
Make payments no-fuss. Speaking of making it easy for your clients to pay, do your market research to know the mode of payments that will be most convenient for your customers. If your industry is well-versed in online transactions, then setting up Paypal and other online payment options will not just make the process more efficient but may even also boost your sales. A lot of companies also offer incentives for early payments. A little push and a bit of business goodwill can work wonders in encouraging clients to pay in a timely fashion.
As with most things that involve money, effective communication is essential. Always be in tune with what your clients want and need, as this will give you clues on how to improve certain components of your dealings with them. Be up-to-date with innovations and new technologies in the industry that you can adopt to improve your business.