A huge issue many companies face is not receiving payments on invoices in a timely manner. This is a threat to your business and your working capital, as late payments can negatively affect your cash flow. Fortunately, there are a couple ways to try to prevent late payments.
Accept multiple forms of payment.
Giving your customers flexibility when accepting payments may get you paid quicker. Offering multiple forms such as credit card, cash, bank transfers, and mobile pay gives your customers options. In return, it should make the entire process faster and easier for them, allowing payments to smoothly come in.
If you send out your invoices on a specific date every month, it may be more beneficial for you to send out invoices as soon as possible. Try to send out invoices according to the terms agreed upon in the contract, or as soon as the task has been completed. If you find that to be burdensome, consider automating your invoices. To automate your invoices, businesses use a software to create an invoice template that can be used multiple times. With this software, once a new invoice is sent over, the information will be entered in the template and scheduled to be delivered. By automating your invoices, you save time by not having to prepare every invoice manually. Release these automated invoices as soon as possible, then follow up with your customers to ensure for a smooth transaction process to promote business growth.
Incentivize early payments for getting invoices paid.
The faster your clients get their invoices paid, the better. Without any benefit or reward for early payments, they may not feel inclined to pay earlier. Even a small 1-3% discount on the invoice total for payments made 10-15 days before it is due allow invoices to be fulfilled faster. This incentive can be offered to give thanks to your customers who make paying a priority and it can also help you build stronger relationships with clients.
Overall, dealing with invoices can be a bit inconvenient and troublesome. Try to implement these techniques to make the process easier. You may also want to consider selling your invoices to a factoring company for a small fee, and they will deal with your customers’ invoices directly. If you are in need of working capital fast, this option can be beneficial for you. You may receive a large percentage of the invoice total within days. Instead of waiting for the invoice to be paid. You will also have the added benefit of having the factoring company become your back office. By monitoring your accounts receivable to assist you in ensuring timely payment.