If you’re a business owner I’m going to make the following assumption. That at some stage you have been unable to sleep wondering how you’re going to pay payroll for the week or pay suppliers so they don’t cut you off.
I know the feeling, it’s horrible and so stressful.
You know your business is making money, but why don’t you have cash in the bank? It just doesn’t seem to make sense!
One of the reasons could be you aren’t getting paid on time.
Yes, it’s unfortunate, and it happens to most of us, but part of business is ensuring you get paid and you need to do whatever it takes.
We all know that CASH IS KING, so here are my top 7 tips to actually getting paid:
1. It pays to be NICE.
In small business people buy from people and if they like you they will pay your first. If they don’t, you will go to the bottom of the pile. It’s just human nature, we’ve all done it.
2. Be easy to deal with and offer exceptional customer service.
If you deliver the wrong products or it’s faulty, a credit needs to be raised and it just makes more work for the time poor customer. So if your account is easy to pay with no adjustments, again they will pay you first.
3. Set smart payment terms.
Get paid from your customers BEFORE you need to pay your suppliers. So if you need to pay your suppliers monthly, set your customer payment terms as 7 or 14 days.
4. Make your terms VERY VERY clear.
Are you a 7 day account from date of invoice? Or from date of statement? Depending on how often you deliver, I suggest an invoice goes with the goods (or emailed), then you send a statement weekly e.g. every Friday and then payment is due the following Friday. Make sure it says this clearly on the statement or invoice. Also, you need to know how your customers pay and accommodate their differences. If it means getting paid on time, you need to find a way that works for them.
5. Send statements on the same day CONSISTENTLY.
Many bookkeepers only work part time, so you have more chance of getting paid if they know your statements arrives every Friday for example.
6. Make sure your email address for your statements is your trading name.
For example, we are SOL Breads but our legal name is Genney & Hoyne Pty Ltd. If I sent a statement with Genney & Hoyne I guarantee I would get ignored.
7. Chase late payers NICELY.
Nobody wants to be chased for money, so put yourself in their shoes. You could:
- First, send a friendly reminder email or text, as often it’s just because they’re busy.
- The next step is to call and ask if there is an issue. If they are usually good payers, be flexible and work with them to help them through their issue. We all have cash flow issues from time to time and we always remember the people who help us out, that’s how you build loyal customers.
- But, if they’re repeat offenders, you need to change the way you do business with these customers, without losing them. E.g. change them from an account to COD (cash on delivery) or credit card payments with every delivery, or payments in advance.
At the end of the day if a customer gets what they order on time, you fix any dramas as they occur, and you’re professional, a pleasure to work with and fair, you’ll get paid 99% of the time. Let me know how you go.