How to improve cashflow with tips for getting paid on time

Late payments from clients and customers can be extremely costly in your business. Late payments put a strain on your cashflow meaning you are supporting someone elses business at your own expense, whilst you are having to find other cash to pay your own suppliers and team members.  

 

The time and effort it takes to chase up late payments is time that can be better spent on growing your business and maximising your profits.  

 

Here are some practical tips you can implement in your business to make sure you get paid on time and improve your own cashflow:  

 

 

When you take on a new customer it’s all too easy to get carried away and forget about the practical details. During the onboarding process make sure that you ask the following questions: 

 

● Who should I send the invoice to? 

● What is the approval process? 

● Who do I speak to if there’s an issue? 

 

Handling the payment details up front saves so much time and hassle in the future, and dramatically increases the likelihood that you’ll be paid on time. If you can, get them onto a regular monthly payment so you get regular cashflow coming in.  

 

 

It’s really important that your invoices are easy to understand and accurate. Any mistakes can result in a lot of unnecessary back-and-forth and are likely to delay payment. Sending clear and accurate invoices goes a long way in helping you to get paid on time. 

 

 

Sending statements is an easy way to remind customers that your invoice is due for payment. Be polite and friendly, as you want to foster a good working relationship but don't be shy to ask for a date when you can expect payment to be received. Many business owners don’t mean to pay late, but they’re busy and it simply slips their mind so receiving your statement is a good way to bring your invoice to their attention.  

 

 

Keeping track of invoices and deadlines often feels like a full time job in itself but it’s important to send invoices to clients in a timely manner; how else can you expect them to pay on time? Using invoicing software will automate much of this process, saving you a significant amount of time, which frees you up to do other things. You can also automate your credit control by getting your software to send out statements when the invoice is nearly due.  

 

Invoicing software allows you to create custom invoicing templates, automate payment reminders and alert you to which clients have and haven’t paid. This puts you more in control of your cashflow and reduces the margin of human error within the invoicing process. 

 

 

 

If late payments continue to present a problem for your business, consider introducing a late payment charge to incentivise your customers to pay on time. No-one wants to pay unnecessary overdue fees, so this is an effective way of ensuring that your clients pay their invoices promptly in the future. Be transparent about these fees from the beginning to ensure that clients understand they will be charged extra for late payments. Make sure to send reminders ahead of time to give them the opportunity to avoid these fees. 

 

 

Business owners often feel guilty about sending invoice reminders and chasing up late payments, but remember that you have every right to be paid for the products and/or services that you provide. Whilst it’s fine to be empathetic towards customers who may be struggling financially, that responsibility doesn’t fall on your shoulders. The financial health of your own business must remain your first priority, so never feel guilty about chasing up the payments that you are owed. 

 

 

Being organised goes a long way in ensuring that your invoices are paid on time. These small and simple steps can have a hugely beneficial impact on your cashflow so make them a priority today.