Most businesses would like to speed up the rate at which customers pay their bills. Many businesses are not aware that the power to expedite customer payments is mostly within their control and the way they bill customers.
Use the following tips to enhance your billing and collections process:
One of the best ways to increase the speed with which customers pay you is to understand how they need to be invoiced. Much of the delay in payment can come from your invoice being put aside or bounced back to you because it doesn’t fit within the required invoicing specifications. Questions to ask about invoicing include: What are your payment terms? Who should the invoice go to? What detail is required on an invoice for it to move successfully through the payment system? Is a purchase order number required? Is email, mail or fax the best means of sending your invoice?
Bill in a timely manner
Even though billing doesn’t typically happen until later in a business relationship, it should be discussed early on. If the work is project-based, establish whether you will bill at the end of the project or invoice part of the amount up front. You should consider billing for part of a project when you begin if you will incur expenses for staff or supplies to complete a project. If you are invoicing at the end of a project or when an item is shipped, don’t delay. Even a few days can make a huge difference in how quickly you will receive your money if you happen to miss a customer’s payment cycle.
Call about late payments
No one enjoys contacting customers about late payment, but diligently following up on late invoices will dramatically increase your collection rate. A key component of successful follow-up is the right approach. Many late payments are a result of an administrative issue or a miscommunication, so when you contact customers assume that they have the intention to pay. Before the end of the call or email, reconfirm the amount due and establish a new due date. Some business owners choose to have a bookkeeper or other person make collections calls to reduce the friction that calling a customer may create.
Keep good records
Establish a system to track your invoicing so that you have a rock solid handle on who owes what, when. There are many invoicing and software tools for this purpose that will help you keep good records and schedule invoices. Companies such as Wave and FreshBooks offer invoicing and accounting software in the cloud for small companies. These packages can be used from wherever you are, as long as you have Internet access.
The power to speed up customer payments is in your hands. By establishing some habits and tapping available tools, you can quickly and efficiently bring in your hard-earned money and put it to good use.Print this article