How to get customers to pay on time

How to Get Customers to Pay on Time

Having customers that pay their invoices on time is critical to the success of any business. Late paying customers affect your cash flow and therefore your ability to meet your own obligations. In most commercial transactions customers pay their invoices in 30 to 60 days. This is commonly known as offering terms.

Offering terms to a customer is no something that can be taken lightly. Many business owners like to congratulate themselves when they close a big sale and send the invoice to the client. Careful owners save the congratulations until after they get paid. But how do you make sure that customers pay you on time?

There are a number of things that you can do to make sure clients pay one time. Apart from delivering good and timely services, the most important thing you can do is check their commercial credit rating. This will tell you whether they have paid their past suppliers in time. Although not a perfect indicator, it’s useful to know. For example, if a potential client has a track record of paying all their invoices 90 days past due, what are the chances they will pay yours on time?

It’s usually a smart strategy to check a clients commercial credit before making the actual sale. One additional thing you can do to help customers pay on time is call them soon after delivery to verify that they are happy with the work/product. Lastly, always verify that they have the proper paperwork (invoices/etc) to process your payment. Many payments are delayed simply because vendors forget to submit the proper paperwork .

Sometimes, clients simply pay slowly and there is not much that you can do about it. This can wreak havoc on your cash flow and threaten the stability of the business. If this happens, you should consider invoice financing.

Invoice financing is an innovative form of business financing that provides an advance payment using your invoices as collateral. Invoice financing is a convenient alternative to business loans that offers substantial flexibility. Although not a cure all, invoice financing can help companies whose biggest problem is that they can’t afford to wait for their clients to pay.