When extending credit, beyond setting up your credit process to properly vet customers, it’s also important that you make managing those receivables a top priority. Just because you made a sale doesn’t mean you’re going to get paid. It’s important to find ways to “help” your customers pay and pay on time.
Here are 6 tips and tricks to help you get paid faster:
1. Invoice Wisely
How you invoice your customers can have affect just how fast you get paid. Whether in the wording (for example, adding a “please” and “thank you” to an invoice increase your chances of getting paid by 5%) or how you send an invoice (you should be emailing invoices AND mailing them), these are details of your invoice process you can alter to speed up payment.
2. Incentives and Consequences
Sometimes customers just need a little push to pay, and rewards and fees can do just that. Consider rewarding early payers by offering them a 1 - 2 % discount if they pay before their due date. Alternatively, consider adding a small late fee to invoices that are paid past their due date. Just be careful to check your state’s usury laws to ensure your fees aren’t too large. Either way, using monetary subtractions or additions is a great way to motivate your customers for on-time payments.
3. Accept Online Payments
Offering online payments can get you paid 17 days faster. There is absolutely no reason you shouldn’t be accepting them. The convenience of electronic payments not only allows users to more easily make a payment, but it cuts out the time you would naturally have to wait for the check in the mail.
4. Take Immediate Action
The longer you wait, the harder it is to get paid. In fact, invoices over 90 days past due are near impossible to collect. Therefore, the day an invoice becomes past due, send the customer a reminder or give them a call. Many times late payments are because a customer simply forgot. Don’t let that happen. Remind, remind, remind.
5. Get on the Phone
The most effective form of communication in regards to payment is a phone call. It’s all too easy to ignore an email, accidentally delete it or push a mailed invoice to the side. When you get a customer on the phone, it immediately draws their attention to the issue. Don’t hesitate. Although discussing payment is never fun, getting paid is. A phone call could be just what you need to make it happen.
6. Organize Your Communication
If you are going to properly manage your receivables, you must run a tight ship from beginning to end. Communication is one of the most important parts of this process. Remember, your receivables are part of your sales process, so you should treat them as you do a sale. Consider adding a CRM component to your receivables management. This enables you and your team to always know what’s going on with a payment. You should track who’s talked to a customer, when and as much detail as you know about the payment. This prevents you from accidentally bothering a customer that’s already told their salesperson the check is in the mail. Keep everyone on the same page to help you streamline your A/R process.
Delinquent accounts occur many times simply because it’s all too easy for things to fall through the cracks. However, by making receivables management a top priority and finding ways to seal these cracks, you will immediately see a decrease in delinquencies.