2. Get invoices out faster
The sooner your customer has the bill, the sooner you will be paid. Ideally, you should arrange to be paid at the time of sale.
If you are invoicing.
- Make sure the bill goes to the customer as soon as you ship or complete a job.
- If you’re working on a large job, consider negotiating upfront and/or milestone payments. For example, you can ask for a deposit at the time the order is made and then a percentage of the payment at various agreed upon milestones.
3. Explore mobile billing technology
For many businesses, mobile devices, such as smartphones or tablets, can be a boon for speeding up bill collection. That’s because they allow you to collect or issue an invoice on the spot. Also consider setting your business to accept credit card and e-Transfer payments from slow payers to speed up the payment process.
4. Track outstanding bills
As part of a cash flow planner, you should maintain a payment calendar. It shows what accounts are outstanding and for how many days. This helps you keep track of cash coming into your business and follow up with late payers.
5. Cultivate relationships
Know who’s handling accounts payable for your customers and keep in touch with them. Make sure that invoices go to the right person in the right department. This is especially true when working with big companies, where your invoice might get lost in the shuffle.
When issuing the first invoice, call to confirm that the client has received it. After 30 days, follow-up and ask if there is anything you can do to speed things up.
6. Pursue late bills diligently
Don’t be shy about chasing overdue debts and don’t wait. Contact slow-paying customers and ask them to pay. As entrepreneur and author Barry Moltz puts it, “You are not a bank… It is your money and if you are to pay your own bills, you need to collect it.”
7. But be flexible
Your long-term, A-list clients might hit a bad patch from time to time. Work with your client on a payment plan to address both the situation and your needs.
8. Offer early-payment discounts
Good customer and supplier relationships can help you wring more cash out of your business. For example, you could offer customers a 1% discount for paying within 10 days. But remember, these discounts are costly for you and should be used only if you need to get cash in the door quickly.
9. Consider firing laggards
Think about dumping your worst customers—chronic late payers, those who complain excessively or those who return a lot of merchandise. Companies often put up with this kind of customer because they’re afraid of losing business. But bad customers cost you money by draining employee attention and company resources.
10. Get help
If your collection efforts are not working, consider bringing in the professionals, depending on how much money is at stake. You can hire a collection agency or a lawyer to help recover what you’re owed.