When you’re busy running a small business, there never seems to be enough hours in the day. From handling customer service, sales, and marketing tasks, to taking care of paperwork, leading a team, and more, there are plenty of things that can cause stress for entrepreneurs day in and day out.
However, one area of business that can really be a headache, particularly if it turns into a big cash flow issue that you can’t recover from, is late (or non-existent) customer payments. Most people hate having to chat up payments from their clients and put off the task until “crunch time” really hits.
If this is you, it’s vital that you put some strategies in place sooner rather than later to deal with customer payments so that your cash flow doesn’t get so badly affected that you have to close your business or go into large amounts of debt to stay afloat. Read on for some top tips for taking the headache out of customer payments today.
Make Payments Quick and Easy for Shoppers
One of the best ways to make payments flow more easily is to make it quick and easy for shoppers to pay you for goods and services. To do this, you should try to put systems in place that are very convenient for customers. For example, consider setting up a direct ACH payment for people.
What is ACH payment processing, you wonder? The terms stand for automated clearing house and refer to the set up of individual and batch debiting and crediting to accounts. It can be done for both one-time and recurring payments and makes collection simple and fast for both parties.
Alternatively, you could also set up EBPP payment systems for electronic bill invoicing and payments. This allows customers to receive invoices digitally and then to pay them at whatever time of the day or night suits them, whether they’re at work, on the go or at home.
If on the other hand, you run an e-commerce business, you should utilize a merchant services firm to process customer payments for you at the checkout. This allows shoppers to finalize transactions using their debit or credit cards, or even PayPal or other digital accounts, with ease.
Always Do Credit Checks Before Setting up Accounts
If you run the type of business that provides 30-day or other account terms to customers, it is important that you’re very careful about who you allow going on the account, and that you have strict policies in place about payments.
Before you let an individual or organization take advantage of an account, it is a good idea to do a credit check, or ask for references, to see if they have a history of making payments on time or not. In addition, you might want to make all new customers pay up front for their orders at least one to three times before they go on the account so that you can test how it is to deal with them first.
When allowing customers to receive payment terms, make sure that you explain your set policies to them up front so that they’re aware of how long they have to make payments, and what payment types you accept. Put the due date, your bank account details, and other relevant information in a prominent place and in large text on your invoices, so that people don’t have any excuse for not finding the data they need to make payment.
It also pays to let them know that if accounts are overdue that they will be unable to place any new orders until their bills have been settled. This will help to incentivize them to pay on time.
Send Out Reminders on a Regular Basis
Lastly, you will alleviate much of the headache of chasing up late payments from customers if you have a set reminder schedule put in place. It is vital that you give your customers reminders about their overdue accounts on the first day that their payment is late, and then every week, at a minimum, after that if they still don’t pay. It is common for people to simply forget about invoices being due, or for bills to get lost in the post or in cyberspace in the first place. As a result, setting up a reminder system will make a big difference.
While you can do this process manually, you’ll save yourself time and stress if you take advantage of an automated online system that can do the work for your automatically. Most digital accounting programs, for instance, have this type of functionality included, or there are other apps you can utilize too.
Category: Cash Flow