8 February 2018
How do you ensure that your customers pay you quickly?
Waiting for payment sometimes feels like waiting for Godot. It is easy to blame the customer for this. But you can also do something to prevent late payments – always better that than to remedy a poor cash flow. With these 3 tips, you are sure to be paid quickly.
Use general terms and conditions of sale, and communicate these clearly to your customers
Communication is the key to every healthy relationship, and that includes your relationship with your customer. Just as the customer is free to express his or her expectations regarding your work, you can do likewise as regards the payment terms. Inform the customer of your payment conditions when you make your price offer, and have him or her sign them before you start doing business.
A lawyer can draw up a set of legally valid general terms and conditions in which you set out your payment terms. You may decide to work with various payment terms for different sorts of customers. If they are aware from the outset what your conditions are, there can be no grumbling afterwards.
Is your customer nevertheless late with a payment? In that case, you can draw his or her attention politely to the agreed terms and conditions. You can also indicate that you will charge interest or a fixed additional fee in the case of late payments.
Put your customer base in orderTrimming back your customer base can, oddly enough, even raise your revenues
It may be a cliché, but this is another hard and fast truth: opt for quality over quantity. Working for a whole array of customers may seem reassuring, as long as they pay on time. If you do go for quantity, that can even cost you extra money, as you will have to spend time sending out payment reminders and so on.
So opt for projects or customers who do in fact bring in money. Cutting back your customer base can, oddly enough, even raise your revenues, since this way you create more time for the faithful customers whom you keep on. Think of the Pareto principle: 20% of your customers account or 80% of your turnover. So be sure to make a careful selection and set aside sufficient time to do so.
As we mentioned above, using general terms and conditions will put you ahead in making clear arrangements. Yet it remains to be seen whether your customer will in fact honour them. So be critical, and as yourself: what criteria must new customers fulfil in order to have a good working relationship? You can, for example, easily check a company's solvency and find more financial information on-line via specialized websites. That way you will not come up against any surprises later.
Automate your preparation, sending and even the follow-up of invoicesTo forget is human, but luckily there are digital memory aids available.
What we like best, of course, is collecting on invoices. But your customer can only pay, of course, once he or she has received an invoice. So take a critical look at yourself: is there a way to speed up the process of preparing invoices?
Set up a structured invoicing process using an on-line tool. This helps you keep your finger on the pulse of the invoices you have sent. If your client's payment deadline is nearing, both you and your client will immediately receive a reminder. To forget is human, but luckily there are digital memory aids available.
Thus, the subsequent follow-up on your invoice and potential collections will be that much easier, and you are ensured of more timely income and thus can avoid cash flow problems.