Late payments is a major problem for businesses every year, many companies run into cash flow problems because they’re waiting for a customer(s) to pay them. The situation could be worse than one thinks if the business has bad debt and unexpected big expenses.
According to Invoice.ng, considering the fundamental factors causing late payments, 24% of respondents said they accepted clients were waiting for payments themselves; 23% accepted clients are disordered and can’t track their payables; and a further 23% said clients set their own internal payment terms for paying invoices, regardless of supplier terms.
The impacts of late payments are sweeping. You can’t pay salaries, suppliers, and also have a positive cash-flow.
Truly, late payments is a problem for businesses does not mean there aren’t tips to avoid or get out of them. Among the ways to steer late payments is to cut unnecessary costs.
BELOW ARE SOME TIPS ON HOW TO WIN THE WAR AGAINST LATE PAYMENTS.
· TRY NOT TO RELY ON A SINGLE CUSTOMER.
Do whatever it takes not to depend on one client for most of your income, particularly if the client frequently pays late. Another danger of relying on a single client is that you’ll take a huge financial setback when that client no longer needs your services or products.
A more secure alternative is to generate your income from a bunch of other regular clients.
Do you know small businesses spend the average of 2 to 3 days in a month just to do late payments follow-ups, use the following tips to overcome this hurdle.
2. Adopt the use of early payments incentives and late payment penalties.
3. Be sure to send invoices to the right person or department, to avoid rejection and delays.
4. Connect with the payment team.
5. Make sure you state clearly what they’re paying for.
· MAKE IT SIMPLE TO PAY YOU.
Offer different payment options like direct bank deposits, mobile payments (USSD Codes), app payments, this empower clients to pay on the spot, as opposed to waiting for them to pay you when they get back to their office.
You can also offer them installments or tranche payments. This makes it simple to work with you, which any client will appreciate.
· HAVE A SOLID RELATIONSHIP WITH YOUR BANK.
Discuss with your bank on how you can set up your credit facility, it gives you instant access to funds when you need them most, which in turns keeps your business going.
Though, you need to a good and solid credit history depending on your bank.
· GET HELP.
Research has found that, 24% of SMEs don’t have an employee who can concentrate on pursuing late payments, and 13% of SME owners don’t have the time to do it themselves, either. Sage Accounting and ERP software would take care of this. However, there should be someone to operate the software.
A BONUS TIP FOR YOUR INVENTORY.
Getting smart with your inventory is important, late payments can also affect your inventory. If you’re under-stocked, you could miss out on sale. If you’re over-stocked too, you’d be tying up your money and having unnecessary expenses like storage and insurance e.t.c.
With Sage Inventory and Order entry module, you can forecast how much stock you need, the best time restock, generate reports and more.
You can also read about the benefits of cloud software to your business here
If you’d like to have a business visibility over financials, operations, sales, and customer service department with customized dashboard, reporting and business intelligence options, contact us here
REFERENCE: Sage, Invoice.ng
INSPIRED By: Ashley Hindsman.