Invoicing and getting paid on time—these are two of the toughest challenges that every business faces every now and then. Late payments can affect your cash flow and in turn impact such things as your bill payment, your production, and more.
Therefore, you should take measures to ensure that you won’t have trouble with invoicing and that you get paid on time. Here are some tips from your trusted factoring company:
Watch Clients’ Payment Behavior
There are clients that start things on the right foot, paying their bills on time, then as time passes by their payments start coming late until you find your business getting affected by their tardiness. It is for this reason that you should always keep an eye on the payment behavior of your clients. Don’t just let things slide all the time. If necessary, consider reevaluating the terms if that would make it easier for the client to pay on time.
Set Clear Policies
From the very beginning, you should set your policies on things like collection and credit limits. Have those specified in your documents and check with your lawyer to determine if having those in the contract can help your business.
Get Deposits Whenever Possible
When your business is growing, you can expect customers to also get larger orders. However, you should always be on the safe side. Make sure that you secure a down payment first whenever a client orders a larger quantity when the client has a less than stellar credit history, or if it’s their first time ordering from you.
Send Invoices on Time
If you don’t send out invoices early, you run the risk of getting paid late. You might want to consider automating your invoices if they’re for a fixed amount. Always remember that the sooner your clients know how much they owe, the better they can prepare for it and the sooner you’ll get paid, too.
Provide Several Payment Options
If the payment option you provide your clients is inconvenient for them, late payments are inevitable. Make sure you provide them with options so they can choose one that works for them. For instance, instead of making them make over-the-counter payments, allow them to pay using their credit cards, online banking, through channels like PayPal, or even cryptocurrency.
If a client still owes you from their previous order, you might want to set a limit for the number of items they can get from you the next time, until the last one is settled. This will keep you safe from large losses.
Offer Incentives for Early Payers
To motivate clients to pay on time, you might want to consider offering discounts, bonuses, or other incentives. For instance, if the record shows that they’ve made payments on time for 10 consecutive invoices, they’re going to receive a reward from you or a huge discount on their next order.
It should be your primary goal as a business to always get paid on time. It will be hard for your business to run if you don’t have enough cash flow due to unpaid invoices. Always keep track of your finance invoice status and the payments made by your clients. Hopefully, the tips shared with you here help you get on top of these things and help you establish a strong cash flow in time.
Porter Capital is an established factoring company in Birmingham, Alabama that offers its working capital solutions to businesses in any part of the country. No matter what industry you may be from, we can help your business with your funding! Contact us today to know more!