Getting paid on time is the lifeblood of any small business. After you’ve done the work and sent the invoice, what comes next? You wait. However, late payments can quickly put a dent in your cash flow, which in turn makes it tough to manage operational costs or fund future growth.
The good news? You don’t have to leave payments to chance. By making it easier for customers to pay, you’ll keep the cash flowing and your business thriving. Here’s how to speed things up and ensure you get paid on time.
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Speeding Up Business Payments
1. Set Clear Payment Terms from Day One
Your payment terms aren’t just polite suggestions—they’re the rules of the game. Set out when and how you expect to be paid, and make it clear in your contracts. Do you want immediate payment? Or are you offering trade credit, allowing 30, 60, or even 90 days for payment?
Including late payment penalties can also work wonders. A 1% to 1.5% monthly fee for overdue invoices is a great motivator for customers to pay on time. Nobody likes paying extra!
2. Send Invoices Immediately (Don’t Delay!)
A customer can’t pay if they don’t have an invoice. Therefore, send the invoice as soon as you finish the work. The sooner you invoice, the quicker the payment clock starts ticking. If your project involves multiple stages, then consider breaking it down into progress payments. This way, it’s easier for clients to manage costs, and at the same time, it ensures you’re not waiting until the end to get paid.
3. Get Organised with Your Payment Admin
Invoicing isn’t just about sending a bill and hoping for the best. Make sure your invoice goes to all the right people:
- Your main contact at the company.
- The person who approves the invoice.
- The finance team that processes payments.
Pro tip: Include any relevant purchase order (PO) numbers and a clear description of the goods or services provided. This reduces confusion and speeds up the payment process.
4. Embrace Digital Invoicing and Payment Options
Gone are the days of printing and posting invoices. E-invoicing is faster, easier, and helps you keep track of payments effortlessly. Plus, many invoicing systems allow you to add payment buttons directly on the invoice—offering multiple ways for clients to pay.
Options like bank transfers, PayPal, or digital gateways such as GoCardless make the process seamless. Moreover, offering your customers more payment choices encourages them to pay more easily, which in turn helps you get paid faster.
5. Follow Up on Outstanding Payments (Politely!)
Even with the best systems in place, payments can sometimes slip through the cracks. A friendly reminder can go a long way. Set up automated payment reminders to keep things moving without sounding pushy.
If a customer is consistently late, it’s worth reviewing their payment history and having a conversation to set expectations moving forward.
Ready to Speed Up Your Payments?
If late payments are slowing down your business, we’re here to help. At Bespoke Bookkeeping, we can streamline your invoicing processes and introduce you to the latest payment tech to keep your cash flow healthy. Get in touch today and let’s get those payments flowing faster!
