Cash flow is the life blood of any business. If your business extends credit to your customers here are five suggestions that will help you get paid faster every month!
1. Ask for Payment in Advance
You might be surprised by the number of customers you have that are willing to pay in advance if you just ask them for payment. Many businesses and most consumers are used to paying at the time of service and don't need to tie up your cash flow. By asking them to pay at the time of booking, time of service, or even offer prepaid service packages, you can dramatically increase your cash flow immediately.
2. Invoice Immediately
Technology today allows you to invoice immediately in almost every situation. People will never pay at the time of service if they don't know how much is owed. By handing them an invoice immediately or sending it by email, you can drastically speed up the payment cycle.
3. Shorten Your Terms
Most customers don't need 30 days to pay a bill. in many cases ten or fifteen days might be plenty of time. Try offering certain customers shorter payment terms and you will see a significant acceleration in accounts paid.
4. Offer Discounts
In many business to business relationships, offering a 2% to 5% discount for early payment is very common. Common terms are verbalized as 2/10/Net 30, or 1/15/Net 30. What this means (2/10/Net 30) is that your customer can take a 2% discount on the entire order if they pay it within ten days. Other wise the account is due in full at 30 days. For larger companies this discount is taken when offered and this will put cash in your bank two or more weeks faster!
5. Make it Easy For Your Customers to Pay
The easier it is to make payment, the faster your customers will pay. Traditional customers will pay by check through the mail. Offering to accept credit cards on delivery, or on your website is a major convenience for many people. A simple link on your web site to accept credit cards instantly extends your business hours from 9-5 M-F, to 24-hours a day seven days a week! Your customers can now pay you at their convenience, even on the weekend or 2:00 in the morning!