How to Make Sure Your Business Gets Paid
The sooner the invoice is in the mail, the sooner you get paid
To eliminate any possibility of confusion, your invoice should contain several key pieces of information.
First, make sure you date it accurately and clearly state when payment is due, as well as any penalties for late payment. Also specify any discounts, such as discounts for payment in 15 days or for payment in cash.
Each invoice should give a clear and accurate description of the goods or services the customer received. Inventory code numbers may make sense to your computer system, but they don't mean much to the customer unless they are accompanies by an item description.
It’s also important to use sequentially numbered invoices. This helps make things easier when you need to discuss a particular invoice with a customer and also makes it easier for your employees to keep track of invoices.
Before sending out an invoice, call the customer to ensure the price is correct, and check to make sure prices on invoices match those on purchase orders and/or contracts.
Know the industry norms when setting your payment schedules. While 30 days is the norm in most industries, in others, 45- or 60-day payment cycles are typical.
Learn your customers' payment practices, too. If they pay only once a month, for instance, make sure your invoice gets to them in plenty of time to hit that payment cycle. Also keep on top of industry trends and economic ups and downs that could affect customers' ability to pay.
Promptness is key not only in sending out invoices, but also in following up. If payment is due in 30 days, don't wait until the 60th day to call a customer. By the same token, however, don't be overeager and call on the 31st day.
Being too demanding can annoy customers, and this could result in you losing a valuable client. Knowledge of industry norms plus your customers' payment cycles will guide you in striking a middle ground.
Constant communication trains customers to pay bills promptly and leads to an efficient, professional relationship between you and them.
Usually, a polite telephone call to ask about a late payment will get the ball rolling, or at least tell you when you can expect a payment. If any problems exist that need to be resolved before payment can be issued, your phone call will let you know what they are so you can start clearing them up. It could be as something as simple as a missing packing slip or as major as a damaged shipment.
The first 15 to 20 seconds of the call are critical. Make sure to project good body language over the phone. Be professional and firm, not wimpy. Use a pleasant voice that conveys authority, and respect the other person's dignity.
What if payment still is not made after an initial phone call? Don't let things slide. Statistics show that the longer a debt goes unpaid, the more difficult it will be to collect and the greater chance that it will remain unpaid forever. Most experts recommend making additional phone calls rather than sending a series of past-due notices or collection letters.
If several phone calls fail to generate any response, a personal visit may be in order.
If the customer refuses to meet with you to discuss the issue or won't commit to a payment plan, you may be facing a bad debt situation and need to take further action.
There are two options: using the services or an attorney or employing a debt collection agency. Your lawyer can advise you on what is best to do.
Source: entrepreneur
Patty Block, President and Founder of The Block Group, established her company to advocate for women-owned businesses, helping them position their companies for strategic growth. Charting the course for impactful, sustainable, profitable businesses, the beacon is control: of your strategic direction, your money, your time, your staffing, and your ability to bring in business. The Block Group brings together the people, resources and ideas that build results.
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