There is nothing more frustrating for small businesses than late payments. The impact they can have on your cash flow can be devastating in the long run. The longer an invoice goes unpaid, the less likely you are to ever see that money hitting your bank account.
When those payments don’t come through when you expect them to, you’re going to struggle to pay rent, utilities, salaries and for raw materials. It can be so hard to manage the thin line between being firm and maintaining good relationships with your customers. There are a few tried and tested ways to put a stop to late payments and to make sure your cash flow is never at risk again.
Most online invoicing software offer automated email and/or SMS reminders when invoices are due to be paid or when they are overdue. This removes the personal aspect as it’s from a third-party and not you directly, making it a less emotional operation.
- Debt Collection Agency
It can be handy to hire a freelance debt collection agent to manage your unpaid invoices. The agent will give your client a friendly call and remind them they have an outstanding balance due on their account with you. This is often all that’s needed to get your customer to pay you, they’re also busy and may have just missed your email.
- Early Payment Discounts
For big orders over certain values you could offer an early payment discount to encourage early settlement.
- Upfront Deposits
It’s good business practice to always request a deposit upfront before any work is undertaken. This protects you in the event of late or non-payment as you can at least cover some of the associated costs.
- Stricter Payment Terms
Clearly state your payment terms on your invoice and when full payment is expected. Make it clear what the consequences of non-payment are whether it be interest charged or being handed over to debt collectors.
- Make payments easy to complete
Offer your customers a variety of ways to pay their invoices. Some accounting programs allow you to offer card payments directly through your invoice. Other payment methods include EFT, Snapscan, Zapper or debit orders. Just ensure your account details are clearly visible on your invoice so they can’t use that as a reason for not paying you.
If you’re in a real bind and need short-term now to manage your cash flow, consider applying for a business loan. We can arrange R50k to R1 million in bridging finance within 3 days, no security required! Apply here!