Buck Anderson posted on August 10, 2007 13:28 :: 3769 Views
Improve your cash flow, and keep your clients coming back for more
The key to collecting money from slow-paying clients comes down to one simple thing: asking for payment. The trick is knowing how to ask so that your cash flow stays healthy and you maintain a great relationship with your clients for future business. Here are four points to get you going in the right direction.
1. Be timely
Send a reminder to your client just before the invoice is due. Then follow up with a quick notice the day after the invoice is due, and maintain steady contact afterwards. Remember, other vendors have invoices competing with yours. The squeaky wheel often gets paid first. So stay in touch. close touch.
2. Be forthright
You have a reasonable expectation to be paid according to your terms. Don't be timid. To avoid asking for payment doesn't do anyone any good. In fact, it's bad for your business relationship. If you let your clients pay late then you're training them to put your invoice on the bottom of the pile. In time, you'll get frustrated and they'll lose respect for your billing process. That's a broken business relationship waiting to happen.
3. Be helpful
Ask if there's a problem - a reason why your client hasn't paid on time. Not all clients are alike, so you want to offer a payment solution for clients that have a good history with your company or have great promise for the future. Get creative. If they need you to continue shipping them product or supplying services ask them to pay 100 % up front for new orders plus a percent (15%, 20%, 30% or more) of the outstanding balance on top of it. The key is to get something right away to let the debtor know you're serious and to get them in the habit of making payments on the debt.
4. Be friendly
Have you ever heard that you get more with sugar than vinegar? It's true. Even when you're angry and frustrated and feel like telling a delinquent client what a deadbeat they are. control yourself. A display of self righteousness isn't going to get your invoice paid. Instead, try smiling and remain professional when you're on the phone with your debtor. It's hard to talk angry when you've got a smile on your face. And stick to the facts. Don't get personal.
So what do you do if you've tried everything, and your client still doesn't pay your invoice? The proven method is to get a third party involved to act as an intermediary so that your clients will take their invoices more seriously and pay them. Outsourcing your Accounts Receivable Management has many benefits.
. You save company time and resources
. You increase your receivables each month
. Your cash flow improves
. Your company becomes more profitable