Running a successful business relies on two crucial things. Number one, you can attract the right audience. Number two, they pay you on time. Payment is one of the most significant business issues, as expert lawyers at Accuro Maxwell explain. Indeed, recovering a payment that is due or managing issues related to insolvency cases can be highly stressful for small business owners.
Is there anything you can do that can reduce the risk of customers not paying their invoices? As it happens, there are a few tips and tricks that can make a huge difference when it comes to preserving your cash flow.
Offer Flexible Payment Options
The last thing a customer needs is to face difficulties with payment because the business doesn’t provide enough flexibility. eCommerce platforms especially must prioritize different payment methods. An online shop that only takes credit card payments, for example, could be problematic for customers who don’t have a credit card. It doesn’t necessarily mean they can’t pay for their order. But they need alternative methods such as Paypal or even bank transfers.
Sending Your Invoice on Time
When is the right time to send your bill? Ideally, it will entirely depend on your payment terms. For example, if your business needs to record payment before preparing the order, you want to make sure you send the invoice along with payment options as soon as possible. An example would be an interior designer who agrees on a project with a client but requires a 20% deposit before starting the work. The sooner you send the invoice, the sooner you can expect a payment.
Missing your deadline to send an invoice doesn’t mean you won’t get paid. But, it could force the customer to postpone payment until their finances are ready again.
Choosing the Right Payment Terms
Payment terms refer to the deadline during which the business expects to receive the payment. Sending your invoice on time will affect the deadline. It would be unfair, for instance, to request your customer to pay interest on a late invoice if you failed to issue it on time.
But, essentially, businesses can choose between a variety of standard payment terms such as PIA (payment in advance), Net 7, 10, 15, etc. (payment expected within x days), COD (cash on delivery), or even stage payments (set payments over a predetermined period of time).
It may be worth comparing your chosen payment terms with those typically used in your industry for similar amounts. Indeed, payment terms such as PIA may not be manageable for your customers if they face a hefty bill. So, it could be helpful to arrange your terms to make it easier for your customers to make payments.
Should You Accept Negotiations?
Not every customer will try to negotiate their payment down. However, customers who are already facing tough financial situations may ask you to reconsider the terms or leave the interests off.
Is it worth reducing your payments? Not necessarily. But if a customer is at risk of bankruptcy or contact you via a debt manager expert, negotiating your invoice down may be the only way for you to receive some form of payment.
Too many small businesses face handicapping challenges when customers fail to pay their invoices. While not all issues can be avoided, some may be managed through strategic changes in your payment methods, terms, and invoices.