We work with a lot of businesses and cashflow is always a topic of interest. We’ve summarised some ideas that are probably not new, but a great motivation to revisit some old ideas to get paid sooner.
Provide a Price as early as you can
Communicate your price at the earliest opportunity. People are less surprised and can make an active decision to work with you by agreeing to the price.
Provide more options for customers to pay you
Provide flexible payment methods that are instant, for example, mobile eftpos is an inexpensive method to catch a payment immediately when a job is completed. Whilst a small increase in your bank fees may be incurred, the long term benefit of money in the bank sooner, and less follow up for clients that haven’t yet paid will make it worthwhile.
Can a client start paying off your service or product from the time they decide to purchase?
If your product or service is something that will take time to undertake, or be built, offer for customers to commence a payment plan immediately whilst the job is started and in progress. They may have paid off a significant portion over a few weeks or months whilst the job is completed.
Establish a direct debit facility that can be paid weekly or monthly for large expenses. It will help your clients to smooth out these lumpy costs and improve your regular cashflow.
Can you invoice on the spot?
Provide customers with an invoice on completion of the job rather than mailing it to them afterwards when your bookkeeping catches up to your busy schedule. There are some fabulous low cost online tools such as Xero that allow you to generate an invoice for a client on the spot, and can even facilitate a credit card payment on the spot as well.
Don’t be afraid to ask for payment
Sometimes people genuinely overlook payment, and if you never ask, you may never receive. It helps if you don’t leave it too long between follow ups. After two weeks, a gentle letter may be a great start. If the invoice is hitting 30 days since issue it’s probably time for a phone call. Offer to resend the invoice.
So many businesses find that extending credit to clients seemed like a great idea to begin with, until over a month’s worth of your budgeted income is in the wait list of clients that haven’t yet paid and the bank account feels all the worse for it.
by Tabitha Tworek
Tabitha Tworek is the operations manager for Insight Wealth & Accounting Advice. She holds an Advanced Diploma in Financial Planning and has a wealth of experience and knowledge in improving business systems.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.