How to Speed Up Business Payments

One of the challenges many entrepreneurs and freelancers face is ensuring invoices are paid on time.

It can be a monthly battle to have what is owed to you paid on the agreed date, which can have a knock-on effect on your business expenses. If you are not paid on time, then neither can you pay your creditors promptly, so getting control of this situation is crucial. Here are some simple ways to help speed up business payments. 

Improve Communication

It may seem simple enough, but effective communication can be one of the most important aspects for your business. It could be as simple as miscommunication that has caused payment to be late in the first place, especially with a first time customer or new client. If you are a freelancer, for example, keeping on top of what is due to you starts with promptly following up on any late payments. Otherwise, this can start to cause problems with your personal finances needing to cover essential bills, lowering your credit rating. There are low credit score loans and other short term options that can help if the gap between billing and payment is growing larger. This can help for those unexpected bills that arrive. For larger businesses, having an effective structure in place to chase payments and clearly communicating payment dates is key.

Introduce Up-Front Billing

One way to avoid late payment is to ensure the payment is due before work begins. This means you will already have the payment transferred to you so that you can instead focus on the work rather than worrying about when the money is coming in. This can be easy to do for new customers and clients as they will not have experienced anything different with you. With an established, loyal customer, it will need more explanation as to why you have changed processes. Most will understand and be happy to cooperate. Most e-commerce involves upfront payment before an item is shipped or delivered, so taking a similar approach with your service offering can ensure late payment is a thing of the past.

Provide More Ways to Pay

It could be that your payment options are restricting how you are paid, and this can be true for older businesses in need of modernisation. It can also be true for freelancers who may have not considered having multiple methods either. These days, there are so many different approaches available that go beyond bank transfers, with electronic invoicing helping customers pay online and via mobile or tablet devices. By providing more options, you can reduce any excuses from customers and clients and enable timely payments every time.

Offer Incentives

Sometimes the best way to get what you want is to incentivise. This could be as simple as providing a discount for early payment, for example, 10% off if payment is received on a certain date. Finding an incentive that will resonate with your clientele is key here, but once you do offer incentive, ensure it will not cause more problems. If you offer money off a service or product, make sure that it is viable for your business and doesn’t leave you short. 

Getting paid on time and promptly isn’t always possible as life can throw up some unexpected circumstances. This can’t always be helped, but in situations where people forget or are just always late with a payment, it can help avoid persistent invoicing issues.