Tips to ensure you get paid

Are you having problems getting your customers to pay their bills or dealing with clients who drag their feet when it comes to forking over the cash?

A small business needs to maintain cash flow in order to stay profitable and customers dragging out payment can be a major hurdle, particularly as the country emerges from a tough economic period. Dun & Bradstreet's latest business-to-business trade payments figures show that payment terms are on the rise, with the average time taken to pay an invoice sitting at 53.6 days during the December 2009 quarter. As a result, some small businesses are finding getting paid as difficult as getting blood from a stone. The trick is to limit the risk before you extend credit.

Here are five tips to help ensure you get paid:

Make it easy for customers to pay

It may seem obvious, but the easier you make it for your customers to pay the quicker you will receive payment. By offering a number of payment methods the customer has the ability to choose the option which suits them, often taking the worry and delay out of paying. There are plenty of payment options available to you (some free and some with charges) including cash, cheque, credit card, direct debit, direct deposit/Bpay and online payments using payment systems like PayPal.

The best advice when looking at payment options is to do some research and determine the best process for your business. If you trade online PayPal, Bpay or credit card payments may be the easiest method for you however, if you trade face-to-face, perhaps you should look into cash, cheque or credit card payments. And for regular customers, there is the direct debit option, which almost completely takes the responsibility from the customer, ensuring a regular payment for your business.

Remember, the more options, the easier the customer will find it to pay.

Research a new client

Doing your research is as easy as ordering a credit report and can reveal the payment history of a new customer. By being diligent with who you take on as a client, you can reduce the risk of late or non payment. Using a credit report, available through Dun & Bradstreet, you can determine a business' financial stability and payment patterns. This simple action removes the need to cold-call other businesses which have previously worked with the customer and gives you control over who your business trades with.

Also, think outside the box a little. If you are asked to provide a reference you will obviously pick someone you know will speak highly of you. It's the same principle with trade references - a business isn't going to give you the number of a company they regularly pay late.

For a small fee, a little bit of research could save your business a lot of time and money in the future.


Be mobile
  

For businesses that visit customers in their home, or trade through a mobile location, a lack of cash on the client's part can be a problem. A mobile EFPOS machine, portable payment system or mobile telephone/Bluetooth device may be worth some investigation. Some of the new payment systems using a mobile phone can connect to an online administration system, reducing paperwork - all you need is the software and a compatible mobile phone. A mobile payment option may also remove the need to invoice as credit card payments can be made on location, speeding up cash-flow for you and reducing payment stress for your customer.

Get paid on your terms

One of the most simple (and often overlooked) steps you can take to ensure payment is to make your terms clear. Plainly state on the invoice your payment terms and how the payment can be made - a confusing invoice will be put at the bottom of the pile. However, including 'Net 30 days' on an invoice is not clear enough, you should state the due date on the invoice to make your requirements obvious. Phrases like 'due date: __' or 'payment due by __' can not be easily misunderstood.

You should also make clear how you expect to be paid by adding the payment options available and details on how to make the payment. For direct deposit include your bank account details or mailing address for cheques, and so on. If the information is available on the invoice in a clear format, there is little chance of misinterpretation and more chance of getting the money in your pocket. 

Stand your ground

Payment terms are useless if you don't stand by them. If you are relaxed in your payment terms and conditions, you can expect your customers to be relaxed in paying on time. Follow up any overdue invoices with a telephone call or reminder letter as soon as possible. Another option is to send a statement outlining both payments made and unpaid invoices. Some businesses don't keep accurate records and statements are a sure-fire way of reminding customers that you are aware of outstanding invoices and expect payment.

The extra time it may take to implement these processes will ensure your customers are aware you won't tolerate late payment. Paying on time is more than just about money and the customer should be aware of this - a prompt payment goes a long way to ensuring a mutually beneficial business relationship.

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