Businesses are used to jumping through hoops for their clients. With their websites, for example, companies go to great lengths to turn their visitors into customers.
Once they attract their customers, companies do a lot to maintain their engagement levels. Of course, this process is just a part of doing business, and a business that doesn’t go after its customers isn’t going to be a business for long.
But neither will the business that allows its customers to pay whenever they want. In some cases, buyers don’t pay upfront, or at the point of sale.
They pay once they get the goods or service they want and after you’ve sent an invoice to them. And while plenty of customers like to pay on time, you, the business owner, will need to chase after some of them.
Making It Easy for the Customers to Pay Faster
But before you start chasing your customers for late payments, you first need to make sure that you’ve made it as easy and as convenient as possible for them to pay you.
Your customers might prefer one payment method over another, so it would be a good idea to enable all the payment methods your business can handle.
You have cash and credit cards as the traditional payment options. You also have online payment platforms. And even checks don’t have to be a pain. Modern payment processing services, such as Check 21 processing, have made it easier and faster to process checks. The more options you give your customers, the easier it will be for them to pay you on time.
Be Prepared to Invoice
If you want your customers to pay quickly, you need to be quick when it comes to invoicing. As soon as you have done the work, provided the service, or supplied the products as stipulated by your contract, you need to issue an invoice.
There are many different websites, as well as types of software, that can help you with creating an invoice. But you should think about composing yours on your own.
When it comes to invoicing, language matters a lot. As always, it pays to be polite. Including words such as “thank you” and “please” in the terms section of the invoice is a good choice. You should also include a time frame during which you expect the invoice to be paid, usually between two to three weeks.
The correct phrasing to use is “within 14 days” or “within 21 days,” not “net 14” or “net 21.” Not all people know what “net” means, so it’s better not to risk using that term.
Positive Reinforcements and Penalties
Two things you should consider adding to your invoices are positive reinforcements and penalties. With positive reinforcements, you notify the customers that if they pay before the deadline is over, they get something in return.
A small discount of 1% or 2% will do. Many people see this strategy as a good way to make your customers pay faster, and it is an easy method to implement.
Penalties, on the other hand, are something you should stipulate in your contract first, and then include in the invoice. Penalties are basically a way of asking for interest on the payment after a certain period of time.
For example, you can state that if clients do not pay within a month, the amount they owe increases by 5%.
This strategy can, however, backfire. Something that could happen is that certain customers might find it easier to pay a 5% interest on your fee than a larger interest on their credit cards.
Don’t Be Too Shy to Follow Up
Some people are shy when it comes to reminding customers their payments are due. If you’re one of these people — stop.
You delivered on your part of the contract, and you have a right to be paid. You’re not being pushy or a nuisance simply by asking for what your client agreed to give you.
You can find plenty of examples of follow up letters or emails. It’s more important, however, that you know when to follow up.
And because preemption is always better than dealing with the consequences, you should send your first follow-up before the due date.
Two or three days will be enough time. Then you’ll want to send collection letters regularly, every five to seven days.
Following up on late invoicing is never fun, but neither is having to wait for a very long time to get paid. That’s why it’s best to make sure that all of your invoices go out as quickly as possible and that they contain the right language and incentives.
And if that system doesn’t work, following up and sending out collection letters and emails is what you’ll have to do next.