Unpaid invoices and delayed payments can cripple your small business clients’ cash flow. Here’s how to help your clients get paid faster with these three simple strategies.
As an accountant, you have insight into every dollar that comes in and goes out of your client’s business. You’ve no doubt seen how past-due invoices can put a kink in the cash flow of even the most profitable business.
One report estimates that late payments cost small and medium businesses a whopping $3 trillion a year, with 1 in every 10 invoices paid late. CBS News reports that 65 percent of small businesses routinely see customers pay after the invoice is due.
Delayed payments can have a potentially devastating ripple effect. According to CBS News, 79 percent of small business owners aren’t able to pay themselves due to late payments while 17 percent are unable to invest in their business.
Late payments can make it difficult for businesses to cover operating costs, inventory needs and even payroll. Fortunately, these common challenges can be solved with invaluable insights that help businesses collect on invoices faster and with less effort (not to mention, stress).
Here are a few steps your clients can take to get paid faster:
1. Offer Customers More Ways to Pay
The easier businesses make it for their customers to pay them, the faster they’re likely to receive the money they’re owed. Let’s face it, writing a check takes effort. Beyond remembering to do it, there’s the matter of locating the checkbook, finding an envelope … you get the picture.
Customers who are given the option of paying with a credit card, via bank draft (ACH) or through electronic invoices are much more likely to pay on time. Today’s intuitive invoicing platforms can make it even easier for customers to make payments. In many cases, all it takes is a single click.
2. Reward Early Payments
Who wouldn’t appreciate an incentive for doing something as seemingly simple as making an on-time payment? While many businesses offer a small discount for early payments, incentives don’t have to be in the form of cash.
Business owners should consider non-cash rewards that enhance their brand and help strengthen customer loyalty. Customers who pay their invoice early for six months straight could receive a small gift from the business. A brief, handwritten thank-you note can also go far, as can a modest customer appreciation event.
Incentives are all about showing customers that they’re valued. Any form of recognition will be appreciated, and customers will be more inclined to keep up their positive track record of payments. Like so many things in business, it all boils down to the all-important customer relationship.
3. Put Invoicing on Autopilot
How much time does your client spend each month tracking down late payments? What if there was a better way to get paid that didn’t involve uncomfortable phone calls or endless emails?
Automatic invoicing makes collecting payments easier for both business owners and their customers. A seemingly obvious key to getting paid on time is to invoice immediately once the service is complete or the goods have been delivered. Overburdened business owners often struggle with this simple task — especially when they still rely on paper invoices that must be mailed.
These unnecessary delays are easy to avoid with an online invoicing system. In addition to making it simple to invoice immediately, online tools can help business owners set up a recurring invoice schedule along with automatic reminders and alerts to notify customers when payments are due or past due.
Many online invoicing solutions also allow businesses to set up auto-payments, which can help with timely payment every time, without any extra effort. While assisting clients with accounts receivable-related cash flow issues is a great way to enhance a relationship, accountants should also consider other ways to offer actionable advice that can help a business grow.
Remember, you’re in an ideal position to step into an advisory role and help your clients strengthen their cash flow in other ways, operate more efficiently and ultimately succeed in business.
Tucker Mathis is CEO of FINSYNC Inc., a consolidated cash flow management platform focused on helping businesses grow. Tucker has dedicated nearly 20 years of his career to the fields of software and lending, helping companies to raise capital and better drive sustainable business results. ...