Cash is king as they say. Yet, some businesses don’t have an effective cash collection process in place to make sure that their clients pay them on time. It’s very easy for businesses to become relaxed after the sales agreement is signed. However, when they aren’t collecting cash for goods or services rendered on time, they are essentially extending credit to their customers. Find out how to get paid quickly.
Improve cash collection
All business must have a process in place in which their customers know the payment terms upfront and the policies that must be followed. Any cash collection process with lenient terms is a recipe for disaster. As they say, if you give an inch, they’ll take a mile. Of course, you don’t want to rub a potential or existing customer the wrong way, but that shouldn’t be a problem if it is clear what the payment terms are upfront.
During the cash collection process, it’s also important to be completely objective and not let your emotions get the best of you. Calling a client up screaming will not help you get paid faster. Rather, follow-up with the client if they haven’t processed payment to make sure they received the invoice. It’s quite possible that they may have overlooked the invoice and never meant to delay payment.
If you haven’t tried this in the past, you may want to include an incentive for paying within a certain amount of days. You would be surprised, but even offering as little as a one or two percent discount, can ensure you’re paid on time. You can even take it one step further by charging late fees for those that don’t pay on time. This strategy is only effective if the late fees are disclosed and communicated to the client upfront. You can even include late payment fee information on your invoices. Please note that some states have limits on how much you can charge in late fees.
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