Money. It makes the business world go ‘round, yet somehow never fails to give a small business owner a proper headache. Successful financial management is the foundation of a thriving business, but that doesn’t mean that maintaining cash flow throughout the years is an easy goal to achieve. Quite the contrary, between the late payers, the threat from numerous competitors, and the shifting consumer trends, maintaining a positive cash flow can seem like an insurmountable task.
Nevertheless, it all comes down to managing payments efficiently and effectively, and pumping cash into your company on a regular basis. Let’s break down some of the best industry tips on how to maintain a positive cash flow while retaining stellar relations with your clients and customers.
Highlight the invoicing terms in the contract
First things first, every successful payment structure begins with a carefully outlined contract between the supplier and the client. No matter if you’re selling goods on a daily basis or services on a recurring monthly basis, your clients and customers need to fully understand the terms and conditions of your transaction. In other words, you need to make sure that they completely understand their duties towards you and your brand in terms of payment for services.
You can do this easily by running them through the proposed contract in person at the start of your collaboration, or you can have a quick Skype chat with international clients to make sure everyone is on the same page. Have a copy of the terms and conditions delivered into their inboxes, and ask for a digital signature to ensure that they have read and are in agreement with the contract. While this won’t guarantee that late payments will become history, it will raise accountability and minimize the chance of late payments occurring as often.
Send out your invoices early
If you are still using the traditional method of invoice management in which you will invoice your client at the start of each month (allowing them 30 days to pay for your services), then you need to be extra diligent with how you handle the entire process. Most importantly, you need to send out your invoices as soon as possible. After all, the invoicing period begins on the day when the client receives your invoice.
This means that you want to shorten the waiting period between each invoice as much as possible. To that end, be sure to send your invoices early, and consider automating the entire process so that nothing slips by you as you’re focusing on other key processes in the company. Finally, double-check all of the information on your invoice, as even a single tiny error will allow the clients to delay payment until you resolve the issue.
Optimize the entire invoicing process
Speaking of automation, understand that technology has become an essential element of modern business, and that it can help you minimize late payments if you introduce the right tools into your invoicing strategy. Particularly, you want to use automated tools to optimize your entire payment system, allowing your clients to address your fee on their own terms – this will ensure you get your money while remaining in good standing with your clientele.
Your biggest opportunity here is to capitalize on recurring payments. Comprehensive direct debit solutions are becoming increasingly popular with clients and customers who want an easy way of paying invoices, as well as with companies that want to automate invoicing without waiting for payment. If you have recurring business month after month, be sure to make it easier on your clients by offering a diversified payment structure that will complement their payment capabilities.
Offer discounts for early payments
People love discounts, and that goes for every type of client, no matter if you’re servicing a fortune 500 company or a small business in your local area – discounts get people interested. If there is a small sum of cash you are willing to forgo for the sake of regular payment for your services, then by all means aim to work a discount into your invoicing process.
You needn’t go above 5% to inspire and incentivize clients to pay their invoices on time, as any amount of cash they can save will be enough to make them automate their payment schedule and deliver on your expectations every single month. After all, positive reinforcement goes a long way.
Maintain constant communication with clients
Nowadays, invoicing is not just about sending out a template check to every client and expecting the money to land in your bank account. No, modern clients and customers need and want a deeper relationship with the brands they work with, which means that you need to maintain clear lines of communication with them if you want to get paid.
Most importantly, you will need to make yourself available to address any invoicing problems or questions they might have. Send out a follow-up email to check if they received the invoice, and ask if there is anything else you can help them with while encouraging them to contact you should they have any questions. Once they do, aim to help them in any way you can in order to build a trustworthy brand image and help spread the good word of your company throughout the industry. Remember, a service with a smile is what the modern client is looking for.
Maintaining cash flow and ensuring regular payments has become an art form in its own right, as it requires careful planning and meticulous execution to incentivize a client to pay up. Seeing as how strong-arming doesn’t work, the only thing left to do is to emphasize positive reinforcement with these effective tips in order to preserve your brand reputation while getting paid on a regular basis.