Here are 10 ways to keep the cash flowing. Some apply to any type of business while others are best for B2C or B2B
- Create better invoices: Many businesses hurt themselves by sending poorly done invoices. Bills and invoices must be detailed, yet simple and clear. The invoice should itemize everything and be sent promptly. This reduces questions and confusion that cause customers to delay. Avoid cute designs and fancy colors that detract from the main business purpose of an invoice. Make it clear how checks should be made out, where they should be sent, the due date (or simply “On Receipt”), and any instructions for paying online, by credit, debit card, PayPal, or another method.
- Use a cloud-based billing or invoicing service: Online invoicing and billing services designed for small businesses, self-employed professionals and freelancers are a great solution. For example, Bill.com offers a popular online invoicing tool that lets you simplify and speed up your accounts receivable process. You can easily create, send and track invoices. Customers can view and pay your invoices online, and the cash goes straight into your bank account. FreshBooks.com offers similar services.
- Offer early payment and pre-payment discounts: When you rent a car or reserve lodging, many car rental companies and hotels offer two prices: A discounted price if you pay in full now; and a higher “pay later” price. Why not try something similar? Consider offering a discount of, say, 2%-5% for paying in advance. This rewards customers, gets you the cash quicker, and saves you the time and effort of trying to collect later.
- Set a penalty for late payment: First, you’ll need to establish a clear and consistent policy explaining that late payments can trigger a fee. Even if you don’t actually charge the fee or end up waiving it for loyal customers who are late for good reasons, just mentioning it on your invoices will spur prompter payments.
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