How to stop chasing payments and getting paid faster
Late payments not only affect cash flow negatively but also consume a merchants valuable time. Business owners often spend a considerable amount of time each month chasing payments, which is a more common issue for small and medium businesses as invoices are typically paid an average of 28 days past the due date and one in every six invoices remains unpaid after 90 days. These overdue invoices can lead to financial problems for small businesses. Instead of wasting time and energy on chasing payments, entrepreneurs should focus on providing quality services to customers. Here are some tips to help break the cycle of chasing overdue payments.
How chasing for payment hurts your business
Before sitting down to write a chasing letter for late payment, it is important to consider the impact on the business. It is understandable to want to get paid, but continually contacting customers about money can make the relationship purely transactional. The best business-client relationships are built on trust and satisfaction, not just money. Additionally, sending repeated payment reminders can make the business seem pushy and even desperate for cash. This can be off-putting to customers and may lead them to question the financial stability of the business.
Chasing clients for payment can be a waste of valuable time and resources that could be spent on more productive tasks. Though it may not take much time to write a single chasing for payment email, these efforts add up over time, particularly if multiple emails need to be sent to each client.
How to chase customers for payment more effectively
Despite the best efforts, sometimes invoices remain unpaid. One way to streamline the payment collection process is to use accounting and invoicing software such as Xero and Zoho Books for example. These tools allow for automation and can significantly reduce administrative tasks. Online invoicing tools also provide the option to schedule automatic reminders and follow-up emails which are sent by the system, this also eliminates the human aspect of chasing payments, preventing potential negativity and deterioration in customer relationships.
A common way is to also setup recurring payment or subscriptions, this is to ensure a payment is already scheduled beforehand for repeat business or invoicing. Setting clients on subscriptions significantly reduces the headaches associated with regular invoicing, and also confirms the clients are still using the service and happy continuing to do so.
Tips to reduce chasing payments
The best way to avoid the situation is to stop chasing payments entirely. Automated software is useful as it allows for timely issuance of invoices and makes it easy for customers to make payments with just one click. Here are a few additional ways to prevent overdue invoices:
Request upfront payment.
This is standard practice for freelancers and some industries. A contract should be created for each new client outlining the services they can expect to receive as well as a breakdown of charges. Then either full payment or deposit of the total bill can be requested. This clearly establishes expectations and reduces any disputes that could lead to future payment delays.
Send small, frequent invoices.
If working with a regular client, don’t send a large bill at the end of the project. Instead, invoice at small, regular intervals if this is possible. Invoices should be sent as soon as work is complete to make the services fresh in the client’s mind. For ongoing clients, a regular monthly billing schedule could be set up to encourage timely payments.
Make it easy to pay.
Reduce any barriers to collecting payments as much as possible. It’s good to accept a variety of payment methods that cater to the client’s preferences. A payment processor that offers easy to use payment links embedded directly in emails or over chat apps and invoices should be signed up with, this allows customers to pay as soon as the invoice is received without searching for bank details or having to chase the payment for days after it is transferred.
Take charge of payment collection
Paymennt.com allows businesses to easily collect remote payments directly from customers in an easy and efficient way. This is especially important for non-ecommerce businesses and businesses that do not have a website, where sending a payment link is easy over email or whatsapp chat for example. Merchants get instantly notified when a payment is done, reducing the time for confirmation and certainly giving the customer an easy way to pay.
Paymennt.com also offers subscription and recurring payments, so merchants can set up their clients on a recurring payment plan easily and seamlessly collect without having to chase.
Get in touch with Paymennt.com to know how to send payment links and setup a subscription for clients today.
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