It’s only logical that you want to be paid for the work you complete as quickly as possible. But when you don’t take payment for your work or what you sell at the time the transaction has been completed, it can sometimes be weeks or months before you get paid.
Here are a few easy ways to help make the time between completing a job and getting paid, shorter.
1. Invoicing effectively – the importance of invoicing quickly and clearly cannot be underestimated. It is the official record demonstrating that work was complete and money is due. The invoice should look professional, clearly stating the business name, the words Tax Invoice and your ABN. But more than this it should clearly state when payment is due.
It’s also important to be polite, it is surprising how much niceties can help businesses get paid quicker. If you are using accounting software have a look at the different templates available and customise your own. Create a due date field that can stand-out in bold and add a comment such as “it was a pleasure doing business with you.”
You might also consider offering a discount for customers who pay early.
2. Make it easy for you customers to pay you – offering a range of payment options for customers will make paying you a lot simpler. Offering cash, credit card and a third party gateway such as PayPal as options will cover most preferences. Be sure to take note of any associated fees and charges when choosing a provider and how the service will integrate with your accounting program.
3. Know your customers – A positive relationship with your customers can help you get paid quicker. Some customers might delay payment because they were unhappy with the service or product. If you keep an open dialogue with your customer during the process you will have a better chance of identifying problems before they arise.
Further to this, knowing your customers can also come from analysing their activity in your own accounting system. A sophisticated accounting program like QuickBooks will help you get information on an individual’s sales history, recent invoices sent to a customer, recent payments they have made and how long a customer usually takes to pay, which can help you identify those who are regularly slow to pay, as well as help with business planning.
4. Get your timing right – invoicing quickly and following up payment at the right time can help you avoid payment delays. Tablets and smart-phones are giving small businesses the ability to invoice customers on the spot, even when they are visiting the client. It might be worth investigating if your accounting software provider has an online option that will allow you to invoice via your mobile device.
Making a few simple changes can speed up the payment cycle, which will help you have a clearer idea of where your business is placed now and improve your cashflow.