Increasing sales is a top priority for most businesses but, if your customers aren’t paying, extra sales won’t equate to higher revenue. When your cash flow is disrupted due to missed or late payments, it can have a significant impact on your operations. For some businesses, irregular cash flow can cause operations to come to a standstill, which could be devastating to your firm.
To prevent this from happening, take a look at these four tips to handle non-paying customers:
Take a Deposit
When customers are required to pay a deposit upfront, you can ensure that you’ve received at least partial payment before undertaking any work. This may cover the cost of materials or labor, for example, which means you won’t actually make a loss if a subsequent payment is missed.
Additionally, insisting on a deposit also gives you an opportunity to see how efficiently the customer processes their payments. This gives you an insight into whether they’re to continue making regular payments on time and can help you to gauge your future business relationship.
Highlight Payment Terms
If you’re accepting a new customer, make sure that payment terms are clearly defined and agreed in advance. Instead of relying on verbal confirmation, always ensure that agreements are made in writing. Similarly, include detailed clauses regarding when and how payments should be made so that there’s no risk of miscommunication or confusion.
Making payment terms highly visible, such as using a different font or placing the text in bold, will help to draw the recipient’s attention to them and can help to ensure payments are made speedily.
Businesses can spend a disproportionate amount of time chasing missing or late payments, which can affect their efficiency and productivity. By outsourcing to a collection agency, however, you can focus on your core business activities instead of chasing customers. As well as freeing up more of your time, using a dedicated agency can have other advantages too.
When customers receive correspondence from a collection agency, they’re more likely to take the matter seriously. As a result, payments are made more quickly, and your cash flow is reinstated.
Automate Your Invoicing
If you don’t send invoices as soon as work is complete, payments will inevitably be delayed. Even if the customer pays within the agreed timeframe, a delayed invoice can affect your cash flow and lead to unnecessary financial difficulties for your firm.
Fortunately, this is relatively easy to rectify. By implementing automated invoicing processes, you can reduce the amount of time it takes to bill customers and ensure that invoices are always sent as soon as work is completed, or products have been dispatched.
Maintaining Regular Cash Flow
The revenue that comes into your business is used to fund continued operations, which means it’s vital to your ongoing success. If you can’t pay your own suppliers or staff, it’s going to damage your professional reputation and harm your operations. By making your cash flow a top priority and ensuring invoices are paid on time, however, you can ensure that your business benefits from consistent incoming revenue.