Getting paid on time is essential to maintain cash flow, particularly for small businesses. Most SMEs find this time of year really hard to budget with provisional tax, PAYE and GST payments looming in mid-January.
It doesn’t help that with the summer closedown, chasing late payers can be virtually impossible and even your good payers can lag behind. So what can you do to ensure you get paid on time?
It all starts with the quote. Quote accurately and ensure any changes to the quote are promptly communicated to the client or customer. This will ensure there are no surprises when they see the invoice, which might cause them to delay payment. Outline your terms of trade in your quote, which stipulates when payment is expected.
Invoice promptly. It is important that you have the systems and processes in place to be able to invoice promptly. Invoice as soon as you have completed a job; if you are a tradesperson, with the development of mobile payment solutions, you can even invoice and take payment on-site! Make sure that if you have other people working for you, they know to communicate completion of a job straight away, as well as any obstacle that could delay finishing. If you are prompt with delivery and stick to your side of the agreement, the expectation is set for the other side too.
Make it worth their while to pay on time. While the threat of a late payment fee may be conducive to gaining on-time payments from some, it can strain a good customer relationship. What might work more in your favour is to offer an early payment sweetener. Offering a discount can often paint you as the good guy.
Make it easy. In the modern world of Internet banking and smart bills, paying invoices has never been easier. Utilise these technologies and offer a range of payment options to make it easy for customers to pay you with the click of a button.
Use accounting systems to manage the process. Having an accounting system can take the headache out of invoice management. Set up your system to notify you immediately when a payment has been missed, so you can follow it up while the project or interaction is still fresh in the mind of your customer.
Chase late payers. Business is all about relationships, but remember that getting paid is not personal. If someone is dragging out their payment, get on the phone and call them. Be polite but firm, and don’t be lenient. Before you end the phone call, make sure you have a confirmed payment date.
Getting paid is how you stay in business, so don’t be afraid to talk money.
Established in 1991, MYOB is now Australasia’s largest business management software provider. Its 50+ products and services have helped more than one million businesses in Australia and New Zealand.
MYOB serves businesses of all ages, types and sizes, delivering solutions that simplify accounting, payroll, client management, websites and much more. With a network of more than 20,000 accountants and other professional partners, it provides the support and tools that help make business life easier.
Today, MYOB is extending its solutions online and delivering innovation through cloud computing, enabling clients to make smarter connections with their business partners and customers.