Missed payments, defaulting customers, and chargebacks can be as damaging to your business as slow growth, as one FinTech industry veteran opines. Therefore, please don’t put all the effort into acquiring new customers and expanding your operations and forget that you also have to check that your customers are paying, and in good time too.
It’s important for the cash flow in your business. Research by JP Morgan Chase & Co. shows that a large proportion of small businesses worldwide operate in an environment of irregular cash flow. You surely don’t want to repeat the same mistakes and become one of these statistics.
Therefore, consider the following five tips to improve your invoicing and get paid faster:
1. Automate invoices
Traditional invoicing can be time-consuming and tedious, as it involves manual emailing, sorting, printing, and more. One of the best approaches is to use automated invoice payment software. These reduce the processing time by automatically filling in details of completed jobs and the amounts due and sending out emails to the client at the click of a button.
Time is of the essence, especially when running demanding field service businesses, such as plumbing. Work is carried out by technicians out in the field in numerous locations on any given day. Keeping track of all these jobs and invoicing them punctually can be very time-consuming.
By using specialized software, such as that offered by Jobber, invoices for all logged jobs are generated automatically using customized templates of your choice and sent to clients instantaneously. This ensures that there’s no confusion during invoicing and that it’s done timely and accurately, which increases your chances of getting paid faster.
2. Set clear due dates
Vagueness is the unclear and imprecise use of language, as opposed to specificity and clarity. For instance, if you state in an invoice that you expect payments as soon as possible, the client may not know exactly when they should pay. Indeed, you leave them to interpret the urgency of the invoice, and to some, it may mean three months, to others three weeks, or even three days. You wouldn’t find grounds to blame a client who pays after several months.
To avoid such traps, you’d want to clearly state the date when the payment is due. And see to it that you use clear, simple language that everyone can understand. For instance, you can state, ‘Payment due on or before September 30th, 2021.’ This way, no client will have the excuse of not understanding complex invoicing terminology.
3. Incentivize early payments
You may want to offer discounts for any client who pays in good time. Even if it’s only 1% or 2% of the total price, you’ll find that many clients will pay as early as they can to grab that discount. Several studies show that discounts create happiness, boost overall revenue, discourage cart abandonment, and influence purchases. Indeed, that’s the power of free.
So, tap into this psychology of discounts to encourage your clients to pay early. And once they pay, make a point of saying a simple ‘thank you.’ If possible, you can also give them a gift card to show your appreciation.
4. Penalize late payments
Contrary to the science of discounts, promotions, and offers, humans, both old and young, are sensitive to punishment, and they’ll usually do all that’s within their means to avoid being punished.
You’d want to capitalize on this fact and impose a late payment fee. It could act as a great motivator for your customers to pay promptly.
After all, who wants to part with a few extra dollars just because of failing to pay on time? Certainly, no one. But make sure you communicate these payment dynamics with the customer before signing the contract. If you disclose this bit at the very end, your customers may not take it well.
5. Offer several payment options
Please don’t be rigid and impose only one payment option for your products and services. Try offering your clients several payment options so as to make it easy for them to pay you. Ensure you include methods like bank transfers, e-payments, mobile payments, and even cryptocurrency.
A buyer will find it more convenient to transfer cash to you if their payment method of preference is included in your list. They usually wouldn’t want to go the extra mile of setting up a certain account specifically to enable them to pay you.
Above all else, build a good rapport
By applying the above five tips and others, you’ll surely increase your chances of getting paid faster. And as you pursue payment, remember to show a human face.
Please don’t be so cold as it may be a turn-off to your customers. Treat them as humans by conversing with them politely rather than in a demanding tone. It’s such a rapport that will endear the customers to you and make them pay promptly and even come back for more of your products and services.