3 Ways To Get Paid Faster

Leave a comment

One of the most damaging things to a small business is having clients that pay late.  The best laid plans can be shattered when expected payments don’t arrive. You may then find yourself in that awkward situation of having to juggle the payments due out of your own business and working out what’s the most urgent versus what can wait. You might have to put marketing or outsourcing plans on hold because you no longer have the budget. And of course you have the headache of how and when to follow up. How do you chase up this money without things getting messy and uncomfortable? It can be incredibly stressful.

A lot of the time it’s made even harder because you know this customer has the potential to spend a lot of money with you over the long term and you want to build a warm, strong relationship with them. But how can you play the bad cop when you also want to talk to them about buying more of your product or service?

It’s a difficult situation that a lot of small businesses find themselves in, and it’s probably one of the most common reasons why many businesses struggle to grow. So here are three of my best tips to help you manage the situation better and make sure it happens less and less often in your business.

Forget being a small business and behave like the big guys!

Larger companies (usually) have very clear credit control processes. They know exactly how many days they will allow an invoice to be overdue before they chase it and they know exactly how it will be chased. This removes any of the emotional questions of whether it’s too soon, whether to call, email, message or write; and whether to be surprised and friendly or to get tough straight away.

Your own process may look something like this: a call when they’re 2 days overdue saying you were surprised to notice their payment is late, confirming everything is OK and clarifying when you can expect to receive their payment. Followed by making a note of exactly when that is and another call 2 days after that if the payment still hasn’t been received.  You might also create a couple of email templates that you use regularly as your reminders (so that you don’t have to fret over writing it afresh each time.) And you should also think about the point at which you’re going to send a physical letter. That sounds serious doesn’t it … a letter? Yes, and that’s exactly why your customer will also take it seriously!

There are two key benefits to defining your own process like this. Firstly, because having a process with defined timings removes most of the internal stress that comes with the questions about how and when to follow up. Which means that you’re far more likely to chase things faster and therefore get paid sooner.

The second benefit is that a process actually portrays you to your customer as being organised, on the ball and professional. Which also means you’re likely to get paid faster because let’s be honest – nobody really likes to be nagged. And the bare truth is that if people are choosing who to pay first they’re likely to choose the ones who are most frequently in touch.

Be somebody else!

If you have employees or you use an outsourced team then invoice chasing is one of the first things you should delegate. Now I know a lot of people feel really uncomfortable about that and do the exact opposite so let me explain…

Your team will be less emotionally attached to these transactions than you so there’s a strong chance that they will chase things sooner and more diligently than you. Because they don’t need to maintain the same buying relationship with the customer they can also afford to be a little more direct (within reason!) And of course the other benefit is that these calls can be time-consuming and stressful so getting these off your plate is a big win.

If you don’t have anybody else you can pass this to at the moment then maybe it’s worth looking into using somebody like a Virtual Assistant, especially if late payments are really hindering your business. Another small step you can do is to have an imaginary friend involved. Set up a new email address in a different name at your company and use that for everything to do with invoicing and credit control. That way the customer thinks they’re dealing with somebody else who they don’t have the same friendly relationship with and they may just take things a little more seriously.

Be proactive with the duffers!

If you have a customer who you know regularly pays a few days late, add  a pre-emptive step into your credit control process for them. Start to call them between 2 and 5 days before their invoice is due as a friendly service call and a quick check that they’ve received the invoice, they’re happy with it and with the payment terms. This is a great way to make sure the disorganised get themselves far more organised in future! Once you’ve done this for a couple of months you may well find that they suddenly become very reliable payers. Happy days!

If late payments are regularly causing you a headache in your business and you’d like a sounding board about what you can do to reduce these, don’t struggle on alone, get in touch so I can give you some help.

 

Leave a Reply

Your email address will not be published. Required fields are marked *