Late payments can be one of the most frustrating parts of owning a business – not to mention being potentially crippling to the bottom line.
As the lifeblood of any business, healthy cash flow gives business owners the means to pay employees and procure the goods they sell. In contrast, when times get lean and cash dries up, even the most finely tuned operation can be at risk of collapse.
For many small business owners, uncertain cash flow is what holds them back from reaching their full growth potential.
One of the leading culprits of poor cash flow is late-paying customers. By implementing a few, simple billing practices, you can reduce the time before payment and establish steady, predictable cash flow.
1. Embrace the cloud.
It may be a cliché, but the cloud has changed the way the world does business and. Leveraging the cloud can improve nearly every aspect of running a business.
With the cloud you can have information at your fingertips, anywhere, anytime. You can access the same documents you edit on your desktop from any mobile device. Should you receive a question about an invoice and need to put last-minute touches on it, you can confirm information and send it right away.
Mobile-enabled interactions can solve genuine pain points for businesses and their customers.
2. Invoice correctly on time.
Setting reminders and alerts can help you streamline the process for submitting invoices consistently and on time each month. You may even be able to set up automatic, recurring invoices.
This would reduce the amount of time required for the company to perform redundant communication between customers, businesses and employees.
Better yet, for recurring monthly bills, your customers may even be able to set up automatic payments to the company, saving time on both sides and providing your company faster payment.
3. Offer incentives for paying early.
Use incentives to establish desired customer habits such as paying invoices early. Consumer apps that track rewards and deliver additional incentives and discounts for using and paying through a platform reinforce continued use.
Offer incentives or discounts and give individuals a reason to act quickly and in a timely fashion. Sometimes a little push is enough to get someone over the hump and pay early, the Holy Grail of cash flow.
4. Keep a detailed audit trail.
Track your paperwork. Storing all your invoices, bills and documents in one place (preferably online) lets an organization to keep the business running smoothly. Creating this type of audit trail also adds security for the business and its customers.
You never know when you will need the audit trail to show a customer that he or she hasn’t paid yet.
Related: 10 Ways to Keep Your Company’s Cash Flow Alive
5. Keep open lines of communication with customers.
I have found that often when people have not paid they just didn’t know they had not. Sending a simple email reminder to customers can go a long way. A simple gesture can be the gentle nudge people need to get a payment on its way.
Best of all, you can automate these reminders using cloud solutions. Part of the value of an email reminder is that it reinforces your relationship with the customer and provides an opportunity to engage.
Use the email reminder to create an open dialogue with clients, providing them with a sense of security and comfort.
When your customers know they can come to you with questions, they will want to be sure they do right by you and pay on time. More important, helpful customer service provides customers an incentive to stay with the company amid tough times.