Small business owners in the UK are experiencing positive growth with good market conditions over the years. However, running a business on your own or with a small team can come with a crucial challenge – making sure that customers actually pay you.
There will be those horror stories of customers who become elusive once it’s time to pay you. You are walking a slippery slope when you don’t want to present yourself as being harsh on customers who pay late but also making sure that your bottom line does not suffer.
This guide presents you with four solid steps on how to get paid faster and avoid the pitfalls of late payments. These strategies can strengthen your current payment processes and prevent your business from going downhill.
- Offer a Variety of Ways for Customers to Pay You
Provide a variety of payment methods to your customers. Check out the field if there are common payment systems that most people are using. Take, for example, Paypal or other online banking payments that people are using in your locality. The more options you offer, the more likely it is that a customer will pay you immediately (with whatever payment option is applicable for them).
You can try cash-free invoicing, which is fast and convenient for both parties. Do consider including bank deposits, bank transfers, credit or debit card payments, check or cash payments in your business as well.
Take a look at the following payment options which can help you get paid faster:
- Global Payments: This system allows business to collect card payments online, in person, or over the phone using a secured process.
- Square: This enables business owners to take card payments on the go with the Square Reader device. You’ll be able to accept payments using a credit card, debit card, and mobile payments. It also tracks your business inventory and sales. The money you earn from sales will be deposited into your account in 1 to 2 business days.
- Paypal Here: This app uses a small card reader near your electronic device to accept payments via Mastercard or Visa. The app is free, but you’ll have to pay for the go card reader, which costs $149 or the PIN card reader available at $99. A small percentage of the transaction will be deducted from you. You can also send invoices to customers from your smartphone, process refunds, and itemise orders using this tool.
- GoCardless: This app provides online direct debits that are perfectly suited for recurring payments such as item installments or membership renewals.
2. Make Payment Terms Clear
If you are under negotiations for a new deal or renewal of the contract, make sure that you and the client come into an agreement on the terms and conditions. Clearly present details such as the nature of the work you’ll do, how much it would cost, and when the payment is due in the contract. Get these terms into writing and make sure that everything is signed. This way, it would be hard for deals to be broken and prevent you from losing out on payments. It will get everything straightened out before you start working on a project.
You also have to assist your customers in understanding the payment terms and methods they can use. Allow them to ask as many questions as they can when it comes to paying you accordingly.
Another good way to get paid with less risk is to request for advance payments. This will uphold trust between you and the customer. See this as a form of downpayment for you to fulfill their orders or requests. When the job or project is done, you can request for the other half of the payment.
You can also give incentives for early payments, such as discounts or promos, to motivate them in paying as soon as possible. When you encounter late payments, enforce late penalties so that existing and new customers will avoid missing payment deadlines.
Research suggests that the average customer will pay two weeks late. It is then a good idea to set the deadline two weeks ahead before you actually need to be paid. If you want to be paid within 30 days, set a 15-day deadline for the payment.
3. Implement Automated Invoicing
The traditional method of printing paper invoices and mailing them is becoming outdated. It also leaves a lot of room for excuses such as customers not receiving it, the postal service not sending it properly, or the invoice got lost along the way. Embrace the current online systems that can conveniently generate invoices for you and send them to customers who can pay it online immediately.
Any good invoicing software will remind your customer until payment is accomplished. This helps you focus your time and energy to do other important things rather than manually chase and remind your customers to pay. There are also cloud accounting software available which helps you send your invoice from any device. Electronic invoices also have options to customise your invoices and make customers pay you in just a few clicks. It also helps you track which customers already paid and how much they have given. On top of it all, make sure that you send your invoice immediately so that you can get paid sooner.
Take a look at the following invoicing apps that can help you streamline your payment processes:
- Invoice by Wave: This app helps you create and send invoices without a fuss. You can send customised invoices from your phone and receive a notification when you get paid. It also tracks and duplicates previous invoices with just a tap of a button.
- Invoice2Go: You can create and send an invoice quickly with this app, even if you’re still on the site of a job. It’s also available as an app for the Apple Watch, which automates the invoicing process even more. It detects when you’ve entered a job site, check-in and check-out of work, and tap to send an invoice when the job is done.
- Kashflow: This is a cloud accounting software that allows you to send your invoice from any device. You can even send an invoice in a jiffy once you leave the job site.
If you are still required to send paper invoices, a sure-fire way for customers to not ignore you is to create professional-looking invoices. Include your business logo, branding elements, contact details, and other essential information. These things should be easy to look at and read through so that your invoice will be given importance.
If your customer is a big establishment or government body, ensure that the invoice is addressed to the specific person and department so that it won’t get lost in a pile.
4. Have a Contingency Plan for Late Payments
Besides the tactic of imposing late payment penalties, there are other ways that will push through your right to be paid accordingly. Send gentle reminders first regarding their unsettled bills. If they still do not follow through, you can start a stern demand for the late payment. Your last resort would be legal action if the customer hasn’t paid you for a long time.
Do take note that you have to check the local laws regarding the collection of money. Follow the legal process involved. This, however, is the last step when it comes to getting the money owed to you. It can be quite a tedious job, so you also have to see things in a wider perspective – whether pursuing a non-paying customer is still worth it.
The important thing here is that customers have to take you seriously for them to pay you without fail. Follow a professional approach in all of your dealings – such as finesse and patience when communicating with your customers. Be polite as much as possible when reminding them about payments. You also have to show a good front, such as a professional website and well-laid out online presence, for people to trust your business. Above it all, know your customers well for you to approach them appropriately when it comes to money talks.
At the end of it all, you don’t want your business to suffer in case there are customers who are unwilling to pay. One way to solve this issue is to get financing to keep things running while you are waiting for invoices to be paid.
Take, for example, the fact that small businesses in the UK have good access to financing solutions – with a significant number of small business financing requests getting approved. BizzLoans offers small business owners in the UK as a convenient way to finance their business needs. Business loans can also help you grow your business, with unsecured loan options requiring no collateral and little documentation. Start your way into better business financing by clicking the button below.