If you’re a small business owner, you already know the challenges that can be faced if customers don’t pay on time. While the sales may be rolling in; your cash flow may not be doing so well if you’re far behind on up-to-date invoice payments from clients. Without adequate cash flow, it can be nearly impossible to have enough money to cover all your expenses related to your business, including paying employees, paying vendors, and covering the cost of inventory, to name a few.So, how do you get your clients to start paying on time so that your cash flow doesn’t suffer?
- Shorten Your Payment Cycles
Very long payment cycles that are 60 days and more can negatively impact your cash flow. All of the bills associated with running your business – such as utilities, taxes, lease, and payroll – will all be due in much shorter time frames. As such, you’re going to need the money to cover these expenses, which is why your getting payments sooner rather than later is important. Don’t give your customers more time than necessary to make good on their payments. One way to do this is to shorten the timeframe within which invoices are due for payment.
- Consider Incentivizing Prompt Payments
A great way to get your customers to pay you on time is to give them some sort of reward for timely payments. For instance, you may offer rebates for payments made in the earliest part of the charging cycle or even for pre-payment before any administrative team members get involved in the process. Any type of reward for prompt payments can provide just enough motivation needed to get customers to pay their invoices on time.
- Use Online Invoicing
The traditional paper invoicing route takes much longer to process compared to online invoicing. By the time your paper invoice is sent, viewed, and paid by your clients, some of your pressing bills will need to be paid. Instead, online invoicing using a free online PO template allows you to instantly send the invoice, after which your customers will instantly receive them. Even a matter of a few days can make a big difference to your cash flow situation.
Any measures you can take to get your customers to pay you faster should be considered. After all, customer payments directly impact your cash flow, which, in turn, affect your ability to pay your own bills on time.