Unpaid invoices from slow-paying customers are not ideal for any business. This is money that could be reinvested into your business for cash flow. Every day that the invoice sits there unpaid affects business growth. There are steps that can be taken to help reduce the stress and give you more control over receiving unpaid invoice payments to improve your business cash flow.
Clear Terms of Payment
Ensure that the terms are clear before committing to any job. Of importance is when the payments are due, the amount of the payments expected, and when late fees will be charged, as well as the percentage of the fee. You could even consider an incentive for early payments as a part of the terms.
Overall, make sure that your client knows what you expect, and visa versa, be clear on what they expect from you. It is important to also know what to include on an invoice, for example, a clear description of the goods or services provided, an ABN, and GST to name a few.
Send Invoices Quickly
It’s as simple as ‘the sooner you send the invoice, then the sooner you will get paid’. Often if you are a small business with long workdays, it can be tempting to put off sending your invoices. However, try and look at the bigger picture of your cash flow and business growth as an incentive to send your invoices ASAP. You will also stay front of mind with your customer for the product or services you have just provided, meaning they are more likely to pay quicker.
The best way to send reminders is with an automated system to save you time and to have a consistent, error-free process in place. Try to send the reminders in advance of the payment being due. Your customers may not have these systems in place and could even be appreciative of the follow-up. If there is a specific contact that you deal with, personalise your reminders when prompting them. Use clear language such as ‘Payment Due’ so there is no confusion for the action required. If the payment is late, follow up with a phone call to find out why.
Make Paying Easy
Provide your customers with as many payment methods as possible, especially for paying online. Consider cloud payment platforms and mobile invoice payment apps. The simpler you can make it for them to pay, the better, and allowing them the flexibility to pay the way they prefer, should result in quicker payments.
The above are tips of what you can control to assist your business to improve its cash flow gaps from slow-paying customers.
About Us – Nova
If you need assistance with your business cash flow, we offer a reliable invoice factoring facility and are committed to the growth of small and mid-size businesses. Invoice factoring is a cash flow finance solution that allows businesses to access a large percentage of the funds held in their unpaid sales invoices. Your business can enjoy the benefits of the cash flow of the invoice before your customer pays it.
Most small businesses need an overdraft if they lack cash flow, which can take weeks for approval, to keep operating and enable the business to grow. Invoice factoring is different because it offers a line of credit backed by your unpaid sales invoices as security, not property. Approval can be within 24 hours!
If you have any questions reach out to us for an obligation-free chat.