by Ayeko Vinton
If you’re looking to improve your business’ cash position, influence clients to pay in a timely fashion, and get your receivables faster, here are some ideas:
Bill Clients Promptly
You won’t get paid till you bill so bill promptly. The faster your clients know what’s due, the faster they can pay you. Using a regular billing schedule and/or billing soon after delivery starts the receiving process and allows the bill to arrive while the work product delivered is still prominent in your clients’ minds.
Offer Prepayment Discounts
If clients opt to prepay for a specific amount of work/time, they get a smaller bill in exchange for their prompt, advance payment. Prepayment discounts help lower clients’ costs while improving your cash flow.
Follow Up on Submitted Invoices
While this technique is not extraordinary, you would be surprised how many invoices go unpaid or are paid late because they were “lost in transit”. Time your invoice follow-up so that it occurs just after receivables are due. Once you have determined which invoices are outstanding, call or email your billing contact for a payment date for the outstanding item(s). You might find that payment has been made but hasn’t gotten to you yet; the items in question were “lost in transit”, or your client has a future payment date and reason for late payment. No matter what you find during follow-up, if done consistently, you will gather valuable information about payment patterns, clients’ internal processes, etc.
Continue to follow up on outstanding items until they are paid. Your follow-up will keep you informed of the status of your receivables and encourage your clients to pay as promised.