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The 10 Smartest Ways to Get Your Business Paid Faster  

by
Sherri Hastings
on
7/11/2017
The 10 Smartest Ways to Get Your Business Paid Faster  

Research suggests more than one-fourth of start-ups fail due to a cash crisis. While profits look appealing on an income statement, cash pays the bills. If you're struggling to convert your sales into cash quickly, consider the following smartest ways to get your business paid faster.

Invoice Immediately

Does your company struggle to send invoices to customers in a timely manner? Your clients aren't obligated to pay you for services completed until you send a bill. To get paid faster, invoice customers immediately after finishing a sales transaction.

Provide Polite Language on Invoices

When creating invoices, you may concentrate more on numbers than words. However, including polite words on your invoices might be a clever way to get money flowing into your business's bank account faster. In fact, a study suggests merely adding things like “thank you” or “please” on your invoices may boost your odds of getting paid by 5 percent.

Itemize Invoices

Besides polite remarks, aim to provide as much descriptive detail about sales transactions on invoices as possible. Provide unit prices for products. Explain how billable hours were spent. If you send your customers ambiguous invoices, you're providing them with opportunities to question how much they owe. Answering phone calls and e-mails about discrepancies further delays your receipt of cash. And, it prevents you from spending your valuable time on other business concerns.

Send Multiple Invoices for Smaller Amounts

The thought of paying a large bill all at once can be overwhelming for anyone. Therefore, when your customers open a gigantic invoice, the first thing they may want to do is put it out of both their sightlines and minds. To prevent payment procrastination from occurring, consider sending clients smaller weekly or biweekly invoices instead of larger monthly ones. Your customers will probably feel more comfortable paying the small invoices sooner rather than later. Even if one invoice is left unpaid for a while, it won't drastically affect your bottom line.

Automate Invoices

Sending paper invoices in the mail is fraught with issues. It takes too long. Invoices can get lost. It's an expensive way to bill clients. Automating the process gets invoices into the hands of your clients faster. You'll also save money. In addition to electronically sending bills, automated invoicing software can also provide customers with payment reminders and links to online payment systems.

Offer a Nominal Discount for Early Payments

To entice clients to pay you faster, offer a nominal discount for early payments. This amount can be a percentage of the total invoice. Even a 2 percent discount can motivate customers to take action.

Attach a Penalty for Late Payments

If the promise of a discount for early payment of an invoice doesn't cause your customers to pay you in a timely manner, the existence of a penalty for late payments might. For instance, you may wish to add a 2 percent fee to all invoices not paid in full by 30 days.

Offer Flexible Payment Options

While some clients might be happy to pay you with a credit card or check, others may prefer direct deposit. Providing customers with multiple methods to pay you both increases your odds of getting paid faster and growing a diverse customer base.

Condense Credit Terms

Do you currently give credit customers the option to pay for goods or services over a 60- or even 90-day period? If receiving cash for sales transactions is your priority, condensing your credit terms might be in order. Consider swapping 60- or 90-day credit terms with 15- or 30-day ones.

Connect With Clients

Making a personal connection with your clients will likely increase your chances of getting them to pay you faster. Don't be shy about sending an occasional handwritten thank-you note when your clients pay off invoices. A phone call or two won't hurt either. Connecting with clients will help them see more than a piece of paper when they receive invoices. It will help them visualize an actual person waiting for payment of goods or services.

For business owners, waiting on cash from customers can be an agonizingly frustrating experience. If you're fed up with playing the waiting game, consider adhering to the aforementioned simple tips.

Tim Murphy, CPA writes for TaxBuzz, a tax news and advice website. Reach him at [email protected].

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Sherri Hastings

Sherri Hastings

Tim Murphy is the managing member at Murphy & Murphy, CPA, LLC, a full-service certified public accounting firm, with emphasis on tax preparation, audits of governmental, educational, and non-profit entities, retirement planning, estate planning, business valuations, litigation support, and banking. He is a Certified Public Accountant in Maryland and Virginia. Tim is also a CERTIFIED FINANCIAL PLANNER professional, Personal Financial Specialist, Accredited Estate Planner, Certified Valuation Analyst, and Investment Adviser Representative.

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