6.21.19

Slow-paying clients? Tips to get paid faster

Tags:

Someone entering invoice numbers into a calculator.

If cash flow is tight because of overdue accounts, adjust your terms and choose your words carefully.

You won the sale, delivered the product and/or service promised, and sent the invoice. Receiving payment is next, right? Ideally, every client would pay promptly. In reality, one of the biggest headaches for small business owners is tight cash flow because of slow payers. Here are tips to help you get paid faster.

Shave two weeks off payment terms

According to Xero, a cloud-based accounting software service, more than a third of all business invoices are paid late. By two weeks, on average. They recommend reducing payment terms accordingly. For example, if you usually request payment in 30 days, request payment within two weeks.

Choose your words carefully

The wording of your terms greatly affects the number of days it takes to get an invoice paid, according to a report from Freshbooks, another cloud-based accounting firm. Insights from their data analysis shows that:

  • It pays to be polite. A simple “thank you for your business” increases the percentage of invoices paid.
  • Express terms in the number of “days” as opposed to “net.” Also using an exact phrase such as “21 days” gets faster payment than asking for immediate payment.
  • Letting clients know that you charge interest has mixed results: when terms say there’s interest on late payments invoices get paid slower, but a higher percentage of these invoices get paid.

Make it easy to pay online

According to Forbes, you’ll get paid faster if you provide a convenient option to pay electronically. Accepting credit card payments through an online service like PayPal or Square means you don’t have to wait until they have money in the bank to pay you.

No payment? No work.

Sometimes the best move is to temporarily stop providing your product or services until the account is in good standing. This lets a client know that paying you isn’t optional. Some folks take a gentler stance; they continue working but firmly let the client know that nothing will be delivered until payment is received.

No guarantees

Unfortunately, even the most proactive invoicing and follow-up system won’t guarantee that you get paid on time. Even so, keep your cool, provide clarity about terms and act quickly on past due accounts. By doing so you’ll maintain more amicable business relationships. And if a client is chronically slow to pay, cut them loose and devote your efforts to clients who pay on time.

Do you have business banking questions? Contact our knowledgeable commercial loan officers or call 800-991-2221. We’re here to help you grow your business!

Federally insured by NCUA

Leave a Reply

Your email address will not be published. Required fields are marked *

Enter your email address to receive notifications of new posts by email.

Get awesome new content delivered straight to your inbox.