As a small business owner, your main priorities during the day are probably bringing in new customers and making sure your current customers are happy. But all your efforts closing the deals can be washed away if your clients do not pay you, or don’t pay within your payment terms.
Most business owners are super motivated about closing the deals but often don’t chase payments with anywhere near the same motivation or organization. The effect on your business between your customers paying with 30 days vs 60 days will have a massive effect on the cash you available to grow your business. Think about how much more likely you are to hire new staff, spend money on advertising or take a client out the lunch if you had an extra $50,000 cash in the bank.
Having consistent cashflow means you can spend less time worrying that wages and suppliers can be paid and more time on coming up with ways to expand your business.
So what are your options when most of your clients are currently paying in 60-90 days?
Be accurate
Before sending invoices make sure you have the correct postal address, business name, phone number and email address. If you invoice is not received by the right person for two weeks then it will probably be put below the invoices that were received prior.
Be clear
If the invoice you sent has charges that the client does not understand they will probably put it in their to do list to call you and clarify the charges instead of passing it straight onto their accounts payable area for payment. If the client waits two weeks to call you then likely you will get paid 2 weeks later than you should have. Communication is the key here so there are no surprises.
Get in touch
You need a procedure in place for when payments are late so it is dealt with in a systematic way. Start with a friendly email reminder, then a phone call if that doesn’t work. Clearly you don’t want to upset your client so don’t be rude or aggressive if this doesn’t work, however you do need to make it clear that it is unacceptable and possibly threaten legal action.
Use invoice finance
Even though you are doing everything you can to encourage clients to pay, sometimes it just doesn’t work and you need a small cash injection just to get you through a period. This is where Invoice Finance comes in. Proxy Finance offers a line of credit facility for clients that can be set up quickly without any paperwork or real estate security. As soon as you invoice your clients, 80% of that money will be available for you to drawn down and use. To find out if your business qualifies for a Proxy Finance Line of Credit click here
