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To get customers to pay and even to pay on time can sometimes be a herculean task.
Sometimes, some clients even bring up different excuses so as not to pay up their outstanding fees.
If you run a service-based business where you deal with different clients and subscription types; you need to ensure customers pay and pay on time.
If customers don’t pay and pay on time, there will be a shortage of cash flow. And as a business, when there is no cash flow, the company can fold up.
According to Brixx, “You can be a highly profitable business but still go bankrupt. Why? Your cash flow goes negative.”
If your cash flow goes negative, that means you don’t have enough money to sustain your business.
When you operate a cash-based accounting; receive payments when the transaction occurs, your cash flow would be positive. However, if most of your sales are accrual-based, that is, receiving payments of your transactions on a later date; then your cash flow would most likely be negative.
See the reason why you need a good cash flow?
So how do you get customers to pay and pay on time?
Use an invoice system: Speeding up your invoice system can help you get clients to pay up their fees on time. What’s more, you can even send multiple invoices in advance with notification of due dates. In addition to this, you have to know who to send the invoice to; trust me, this can either break or mar the payment process. Ensure your clarify who ought to receive your invoice.
Upfront payments and installments: By giving your clients the opportunity to pay upfront and even in installments, you help them take away some of the burdens of paying their fee. You have made it convenient for them to pay you
Create a retainer: Setting up a retainer with your client can help them budget your startup services into their monthly expenses. In addition, it can help you get paid faster and even out your cash flow, as well as help you create a long-term relationship with your clients.
Set expectations early: I am an advocate of setting the right expectations soon enough. When this is done, you have ensured that both parties are on the same page and no one would feign ignorance in the future. Another way to reinforce expectations is by putting them in writing.
Offer incentives: The right incentives can help your customers drop the cheque faster. For instance, you can offer discounts to clients that pay more than 2 months of upfront; it would be a win-win for both parties and also build up customer loyalty.
What are some of the ways you encourage customers to pay and pay on time? We would like to hear from you below!
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