How to get paid without alienating your customers
Thursday, June 04, 2015
For any business, getting paid on time is essential. Without income, you can't make a profit, which is (for most companies) the entire point of operation. If you have cash going out regularly but can't ensure you're being paid on time, a cash-flow gap will develop that could result in bankruptcy if left unresolved.
The key is to do everything possible to get paid on time and ensure positive cash flow, especially for small businesses. But this can alienate your customers if they feel you're putting pressure on them or being unfair in your demands, which can also damage your business. It's a fine line to tread, but you should never be afraid of potentially crossing it — this is your livelihood, after all.
However, there are things you can do to speed up the process of getting paid without angering and alienating your customers and jeopardizing your relationship with them.
Make sure your invoice policy is clear
It's incredibly important to have a clear, understandable invoice policy you can send to customers. This is also crucial if any disputes about late payment arise, either casually or in court should the situation get that far.
The policy should specify the length of time customers are allowed to pay after an invoice has been issued. Additionally, the consequences of late payment should be made clear. For instance, you might cite the late-payment legislation that allows you to pursue legal action if you deem it necessary, and specify the point at which you will do so.
Send polite, frequent reminders
If the payment due date passes and nothing has been received, there's nothing wrong with sending a polite (rather than accusatory) reminder that payment hasn't yet come through and you're checking to see if any problems might have delayed it. The longer the delays continue, the more reminders should be sent.
Always keep the tone polite and make sure the client is clear about the point at which further action will be taken (specified in the invoice policy as noted above). They should have no complaints about the way you have handled the situation.
Make it easy for them to pay
The payment technology you employ, if your business is predominantly online, should be selected so it is as easy as possible for customers to use. You should also prioritize a system that sees the payment come through as quickly as possible so you don't suffer from any further delays.
There are a whole host of programs and systems designed for different types of companies that can be adopted — you're not restricted to PayPal if you don't think it's right for you.
Be as flexible as possible
If a customer is genuinely having cash-flow issues of their own, it might pay to be a little flexible with what you're asking. It can mean a lot to clients — especially those who have been with you for a long time — if you only call in half of their payment and defer the other half.
You might also accept alternative payment methods. Of course, if you can't afford to do this, then don't. However, developing a reputation for flexibility as far as payments are concerned can only help your business to grow.
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