Are you tired of not getting paid by your customers? You're not alone. Many businesses struggle with getting their customers to pay them on time, or at all.
In this blog post, we will discuss some of the reasons why this happens and what you can do to fix it. We will also provide tips for creating a payment policy that will help you get paid faster and reduce the chances of late payments.
Why aren't your customers paying on time?
There are several reasons why your customers might not be paying you on time, including:
You've made a sale to a company that you shouldn't have
Sometimes a bad apple sneaks through the cracks. You may have made a sale to a company that is not reputable or that has a history of not paying its bills.
If this is the case, you may want to reconsider doing business with them in the future. You'll also want to tighten up your vetting process to make sure this doesn't happen again.
Your customer is having financial difficulties
If your customer is going through tough financial times, they may not be able to pay you right away. This might not even be their fault.
If you can, be lenient with them. Offer them a payment plan or extended terms. If they're a good customer otherwise, it's worth keeping them around.
You've invoiced the wrong person
Sometimes the problem isn't with the company, but with the invoice itself. Maybe you've invoiced the wrong person, or put the wrong amount on the invoice.
If you think this might be the case, reach out to your customer and explain the situation. They'll usually be happy to help you sort it out so that they can pay you as soon as possible.
You're not being clear about when payment is due
If you're not being clear about when payment is due, your customers may not even realise that they owe you money. Make sure your invoices always have a clear due date, and consider sending friendly reminders a few days before payment is actually due.
You're not following up
If you don't follow up with customers who haven't paid their invoices, it's unlikely that you'll ever get paid. Make it a habit to reach out to customers who are late on payments, and be firm but polite in your communications.
Reach out to the customer to politely inquire about when you can expect payment. A simple phone call or email can often prompt a late-paying customer to finally send you that check.
You're not using the right tools
If you're still using paper invoices and checks, you're making it unnecessarily difficult for your customers to pay you. Use online invoicing and payment tools to make it easy for customers to pay you electronically.
You're not offering enough payment options
Some customers may prefer to pay by check, while others may want to use a credit card or PayPal. The more payment options you offer, the more likely you are to get paid quickly.
Your customer has a slow payment cycle
Some businesses have slow payment cycles, which means they don't pay their invoices until 30, 60, or even 90 days after they receive them. If your customer has a slow payment cycle, there's not much you can do to speed things up. However, you can try offering a discount for early payment.
You've made an error on the invoice
If you've made a mistake on the invoice, your customer may be hesitant to pay until the issue is resolved. Be sure to double-check your invoices before sending them out, and if you do make a mistake, reach out to your customer right away to apologise and resolve the issue.
What can you do to solve these issues?
Some problems, like your customer having financial difficulties or a slow payment cycle, are out of your hands. However, the vast majority of factors that cause customers to delay payment are within your control.
By following the tips below, you can take steps to ensure that your invoices are paid on time, every time.
Credit check your customers
Credit checking your customers before you extend them credit is a crucial step in managing your receivables. This will give you a good idea of their ability to pay, as well as how likely they are to pay on time.
The trick to credit checking is to make it a regular part of your process, rather than a one-time thing. Don't just credit check your customers once at the onboarding stage; make it a part of your regular routine.
That way, you can track changes in your customers' creditworthiness over time and make adjustments to your payment terms accordingly.
With Chaser's built-in credit-checking facility, you can easily keep tabs on your customers' credit scores and payment histories.
Extend payment terms selectively
One of the easiest ways to encourage timely payments is to extend payment terms selectively. If you're working with a new customer, or one that has a history of late payments, consider extending their payment terms. This will give them more time to pay their invoices without incurring late payment fees.
Of course, you don't want to extend payment terms for all of your customers. Doing so would likely lead to more late payments, as customers take advantage of the extra time you've given them.
Consider using a tiered system, where your best customers get the shortest payment terms, and your worst customers get the longest. This will incentivise your customers to pay on time, while still giving you the flexibility to work with those that need a little more time.
Of course, in order to do this effectively, you'll need access to your customer's payment behaviours. This is where the Chaser hub can help. By monitoring and collecting your customer's payment behaviours, Chaser helps you make more informed decisions about who to extend payment terms to.
Find a contact at your customer's organisation
Sending your invoice to the right person is crucial in getting it paid on time. If you're not sure who the best contact is, do some research or give them a call to find out.
If you've been invoicing the same contact for a while and they're no longer with the company, make sure you update your records so you're sending invoices to the right person.
Get in touch early
If you're chasing a payment, the sooner you get in touch, the better. By getting in touch early, you can avoid any potential misunderstandings about the invoice or payment terms.
The Chaser team are expert at recovering payments quickly and efficiently. If you're struggling to get paid, we can help.
Our outsourced credit control services are designed to take the stress out of chasing payments. We'll work with you to understand your business and customers, and design a bespoke credit control solution that's right for you.
Get in touch today to find out more about how we can help you get paid.
Make sure you have clear payment terms
Your payment terms should be clear and concise, so there's no confusion about when payment is due. Having clear payment terms will also make it easier to enforce late payments, as your customers will know exactly when they're supposed to pay.
If you're not sure what your payment terms should be, a good rule of thumb is to start with the industry standard of 30 days. From there, you can adjust based on the individual customer. For example, if you know a customer always pays late, you may want to extend their payment terms to 45 or 60 days.
Make sure you include information on late fees and interest, as this will incentivise your customers to pay on time.
Offer early payment discounts
Early payment discounts are a great way to encourage your customers to pay on time. By offering a small discount for payments made within a certain timeframe, you can incentivise customers to pay early.
Just be sure that the discount is small enough that it doesn't eat into your profits too much. A good rule of thumb is to offer a discount of no more than two per cent.
You can also offer a tiered discount structure, where the longer a customer takes to pay, the higher the discount they receive. For example, you could offer a two per cent discount for payments made within 30 days, a four per cent discount for payments made within 60 days, and a six per cent discount for payments made within 90 days.
Enforce late payments
If your customers are consistently paying late, it's time to start enforcing your payment terms. This could mean charging interest on late invoices, suspending services, or sending reminders via email or SMS.
The goal is to make paying late less attractive than paying on time, so your customers are more likely to stick to your payment terms.
Some people are scared of offending their customers by enforcing late payments, but remember, you're not doing them any favours by letting them get away with paying late. In fact, you're only harming your own business.
If you don't enforce your payment terms, you'll never get paid on time. And that's not good for anyone.
Offer more payment options
Another way to encourage prompt payments is by offering more payment options. The more methods your customers have to pay you, the more likely they are to find one that's convenient for them.
So, if you only accept cheques or bank transfers, why not start taking card payments? Or if you only take payments over the phone, start offering online payments.
As well as offering more payment options, you should also make it as easy as possible for your customers to pay you. If they have to jump through hoops just to give you their money, they're not going to be happy about it.
With Chaser's Payment Portals, your customers can pay you with just a few clicks, no matter how they're invoiced. And because our Payment Portals are fully automated, you'll get paid faster too.
Check and then check again
Error checking might not be fun, but it's important. If you don't check your invoices for mistakes, you could be inadvertently giving your customers the wrong information.
Errors can compound the already slow process of getting paid, so it's crucial that you take the time to check your work.
Take full advantage of automation
The unfortunate reality is that chasing payments is both vital and time and resource hungry.
But there are things you can do to minimise the impact on your business. Automating as much of the process as possible is a great place to start.
There are now many software programs that can automate large parts of the invoicing process, from creating and sending invoices to issuing reminders and chasing late payments.
Take some time to research the options and find one that best suits your needs. It will take a little bit of upfront investment, but it will save you valuable time and energy in the long run.
The primary benefit of automation is that it can help you get paid faster. By sending invoices out as soon as the job is completed, you can avoid the delays that often happen when invoicing is done manually.
Another benefit is that it can help you keep better track of your receivables. With invoices being sent and received electronically, you'll always have a clear record of what's been paid and what still needs to be collected.
With accurate records of what has been invoiced and when, it becomes much easier to keep tabs on what is owed to you and when payment is due. This can help you to avoid late payments and keep your cash flow healthy.
So if you're struggling to get paid on time, consider investing in some automation tools to help you out.
As the leading automated credit control platform, Chaser can help you get paid on time, every time. With our advanced features and integrations, we make it easy to get started with automated credit control.
Using Chaser allows our customers to get paid, on average, 16-days soon and spend 15 hours a week less on chasing payments.
If you want to learn more about how we can help you get paid on time, every time, book a demo with us today. We'll show you how easy it is to get started with automated credit control and help you take the first steps towards better cash flow management.
We've put together free resources to help you out
Making the most of the free tools and resources that can help is a great place to start.
There are a number of things you can do to improve your chances of getting paid on time, and we've got some great resources to help you get started:
- Use our free payment terms guide to make sure you're including all the relevant information in your invoices
- Download our free guide to credit control for some top tips on how to chase payments
- Use our credit control and debt collection template to help you get paid faster
- Recession proof your business with our free toolkit
- And many many other useful tools and resources on our blog!
With these tools in hand, you'll be better prepared to get paid on time, every time.
Why not check out our blog for more great tips on credit control and debt collection?
Let Chaser help you get paid on time!
If you're struggling to get paid on time, don't worry - you're not alone. In fact, late payments are a huge problem for small businesses all over the world. But there's no need to despair!
Chaser offers a simple, automated way to chase payments and get paid faster. Our platform integrates with your accounting software, so you can automatically send payment reminders and track payments all in one place.
What's more, we offer a range of other features to help streamline your credit control process, including:
- The ability to set up recurring reminders for both email and SMS
- A payment dashboard customisable reports
- A payment gateway so you can accept credit card payments and PayPal
- Editable reminder templates that reflect your brand
If you're struggling to get paid on time, or if you're simply looking for ways to streamline your credit control process, get in touch with us today. We'd be happy to help!
Even better, you can try Chaser free for 14 days without entering your credit card details.
If you're not using Chaser yet, sign up now and get started on collecting the money you're owed!
