When you have a small business, one of the toughest jobs is collecting open invoices. This job often falls to the business owner, and you feel uncomfortable calling other people and asking them to pay their outstanding bill. You need the money, but you don’t want to seem desperate, so what do you do?
Here are give ways to improve the chance that your clients will pay their invoices before they are past due.
1. Understand their Procedures
Large companies often have a complicated payment procedure. Purchase orders are required, approval from upper management, or even a standard 45 days for payment of all invoices. If you are a small business working with large corporations, you should find out in advance how they handle invoice payments. Once you have followed their process, you will find that you will receive payment without further issues.
2. Clear Payment Terms
When you are working with small companies and consumers, it is best to have clear payment terms. All terms need to be in writing and explicit so that your customers understand what is expected of them up front. Review the payment terms with the client and make sure they don’t have any questions when you are finalizing the sale.
3. Early Payment Options
Companies delay payments to save money. Find ways to make businesses save by paying your invoice on time or in advance. By offering a discount for early payment, you can ensure your company will be paid on your terms. You can also encourage consumers to pay their bill on time by giving them a discount on their next order when they pay on or before the due date. Not only will you improve your receivables, you will also increase reorders from current customers as well.
4. Easy Payment Options
Another way to help encourage on time payment of invoices is to offer multiple payment options. Offering consumers the ability to make payments on their mobile phone or options like credit cards will improve their flexibility to pay when and where they need.
5. Follow-Up Call
When you send an invoice to businesses or consumers, you should place a follow-up call. Calling a week after you send the invoice will head off any questions or problems the client may have. You can make sure they received the invoice, have all of the documentation they need, and don’t have any questions regarding the invoice.
When you create an accounts payable procedure you will make sure that all customers are clear about payment terms, the ability to pay early and the different ways they can pay your bill. By understanding the payment procedures for large companies, you will smooth the transition from invoice to payment. Moreover, when you place a follow-up call to your customers you will know if there are any issues before their invoice is past due. These five steps will help you increase your receivables and make more money for your business in the New Year.