They say money makes the world go round, but what does that look like in practice? Well, a good portion of that involves business activity of some kind. Even if they’re entirely state owned as some utility companies are in some countries, they need to be run efficiently, with an eye for bookkeeping, and a means to keep costs low. 

Even non-profits need to find ways to balance the books, and to report their finances transparently to the correct oversight bodies. Moreover, more revenue, even if it doesn’t classify as profit, is almost always worthwhile for a business as they chase healthier cash flow. So, the adage we opened this post with has a fair amount of complexity to it after all. 

As a small business, tapping into some of these concepts is of course essential. One of the most important keeping that cash flow stream correctly balanced, so you’re never out of money when you need it most, and you’ll never be harmed by your liquidity needs. One good way to resolve that is to convince your customers to pay earlier. In this post, we intend to help you achieve that outcome:

Issue Invoices Immediately

Making sure the bill goes out as soon as the work is finished or the product is delivered is a fantastic habit to get into, as there’s no reason to wait until the end of the week or the end of the month to send that piece of paperwork. The sooner your client receives the invoice, the sooner their own internal payment cycle can start, meaning the money arrives in your account much faster.

This requires you to have a good system for generating that invoice right away. We’d suggest you use software that lets you generate and send the bill the moment you complete the service, providing a professional and complete document, maybe something like an ABN invoice template if you operate in Australia.

Offer Clear Payment Options

Asking your customer to pay you quickly is great, but you need to make the act of paying you as simple as possible for them and worth doing. They have their own cash flow to think about, after all, and that might incentivize them to pay at the last moment. Moreover, if they have to spend time searching for your bank details or figuring out how to use an online portal, they’re going to put it off, and your cash flow will suffer. If you can offer a few simple ways, that’s tbest.

For example, you might accept payments through a few different online gateways, such as having bank transfer details clearly on the invoice, and giving them the option to pay over the phone if that works for your business.

Incentivize Through Discounts & Referrals

As we alluded to above, a little bit of motivation can often help settle the bill early and might still be worth it to you. For instance, you can use small financial incentives to encourage a payment, like a modest discount, maybe five percent off, for any invoice that is paid within seven days and not the typical thirty. For repeat costumers, you might even offer ten percent if they just pay the invoice right before work starts.

While you are at it, consider offering an incentive for referrals paid in a timely manner. If a current customer pays their bill right away and then refers a new paying client to you, you might offer them a small credit on their next invoice, which suggests they could do the same next time around! You may be surprised how well this works.

With this advice, we hope you can more easily able to convince your customers to pay earlier.

Photo: Kindel Media via Pexels.

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