It’s a common misconception that running a business is easy. It’s not as simple as establishing the company and watching the money roll in.
In all likelihood, there are going to be occasions where customers won’t pay you for the work that you have done. This may be inadvertent or intentional. In any case, it costs your business money.
Is there anything that you can do to encourage customers to pay on time?
1. Set clear terms
The more clear your terms are, the more likely your customers will make prompt payments. Customers should know exactly what type of services or goods they are receiving, when they will receive them and how much it’s going to cost.
Unexpected add-ons, price adjustments and unclear terms could result in the customer disputing the invoice. Ultimately, this means your business may spend a considerable amount of time without receiving payment.
2. Penalties and discounts
Penalties and discounts can be useful tools in terms of receiving prompt payment. Your business may offer a discount for payment upfront. Or, you can include late penalties for missed payments in a payment plan, as long as these remain within the confines of the law.
3. Efficient invoicing
As mentioned, sometimes missed payments are not deliberate. A client may simply have never received an invoice. This is why it’s so important to use efficient invoicing systems. It’s also vital that you’re sending invoices to the right people.
Electronic invoices are an efficient way to do business and they also cut costs. Your business can even set up automated reminders and alerts so that both you and your clients know when payments are overdue.
It’s important to know where you stand when payments are overdue. Seeking legal guidance will give you further insight into your collection options.