Get Accounting on your personalized My Yahoo! page:

Add to My Yahoo

Yahoo! Answers

Previous Question Next Question

Find practical business advice

getting over the fear... and just doing it!?

4 Answers

Related Answers

light star girl


Small Business Newsletter

Sign up for our free email newsletter

How Can You Get Your Customers to Pay on a Timelier Basis?

AllBusiness.com  Related Articles in: Finance > Accounting

You can try a carrot and stick approach to get your customers to stop being deadbeats. Here are some policies to introduce in your invoices and contracts.


If you find that a number of customers are slow to pay, or dragging out making payments, there are useful tactics you can try, to get paid faster.

Try the carrot and stick approach to get your customers to stop being deadbeats.

First, you can offer them a discount for early payment. Consider adding the following clause to your invoices and contracts:

"Early Payment Discount: The customer shall be entitled to receive a discount on the bill of two percent (2%) of the face amount of the bill. In order to receive this discount, we must receive full payment of the bill within ten (10) days of our sending the invoice."

The stick approach is to charge a late fee if the customer does not pay within the time period required. Here is a sample clause for your contracts or purchase orders:

"Customer Payment Policy: All payments must be received by ABC, Inc., within 20 days of the date of invoice. Any payments received after said date will be deemed late and subject to a late fee equal to 1-1/2 percent per month of the outstanding unpaid amount. The customer is also responsible for all attorneys' fees, court costs, and related expenses incurred in the event payment is not made in a timely manner, and proceedings are brought by ABC, Inc. to collect sums owed."

Another prevention measure for accounts receivable is good cash-flow management. Our Buyer's Guide to Cash Flow Management Tools explains the principles of that process and introduces the vendors of software that can help with cash management. Our Buyer's Guide to AP and AR Software and Services breaks down the key accounts receivable and accounts payable functions and tells you about the kind of support you can buy in those specific areas.

If it comes to pushing the collections efforts a step further, you'll want to know the FTC Guidelines to Fair Debt Collection in order to keep your processes legal.

Find practical business advice and tips on common business issues such as HR , accounting, marketing and more at AllBusiness.com.

Copyright © 1999 - 2007 AllBusiness.com, Inc. All rights reserved.

RATE THIS ARTICLE
Rate it:
Not Yet Rated:

Additional Articles from AllBusiness.com
Can You Get Paid on Delivery or in Advance? - The sooner you get paid by your customers the better. If you are willing to...
Avoiding Cash Crunches - A company's cash flow is its lifeblood. Follow these tips to keep a steady stream flowing in and...
Cash vs. Accrual Accounting Methods - Understand the differences between the two key accounting methods and learn how to...
  Related Articles in "Accounting"
Best Startup Knowledge for Recent Grads - Learn everything you need to know and do to start, fund and manage a successful...
What's My Business Worth? - Top strategies to improve the value of small companies for a successful sale
Collection agencies help you get what's coming to you - Collection agencies help you collect on bad debts. Find out how...