Being lenient with your customers' accounts can unexpectedly leave you without the cash needed to cover your company's expenses. Even if you have several lines of credit, it can hurt you financially to charge purchases, especially since you will be subjected to interest fees. Use some cashflow protection techniques that will aid in having money at your disposal.
Set Clear Terms and a Substantial Late Fee
If you offer a service that involves installing or repairing equipment or if you have a "buy now, pay later" clause in your contracts, you may be used to invoicing your customers and waiting on them to satisfy their accounts on a monthly basis.
This type of setup can work out well for the most part, but if some of your clients begin to fall behind on their payments or disregard your payment requirements, you may feel cheated or be concerned that some of these individuals are going to avoid paying you altogether. Review your contracts, to determine the exact wording that was used to delegate payment rules. Clear terms should be listed, which will inform your customers of what is expected of them.
For example, if you are agreeable to rendering services in advance, but would like to receive prompt payments within a few business days, specify the exact amount of days that can elapse, before adding a substantial late fee to a bill. A large amount that someone will potentially be faced with will encourage them to get their payment to you as quickly as possible.
Prompt Payments on Your End and Discounts and Incentives
Get into the habit of satisfying your bills on time so that you aren't subjected to penalties or the possibility of losing or disappointing a vendor. It can be tempting to pay minimum amounts, but this won't give you a clear indication of what your profits are, plus could make things more difficult for you during slow months when sales aren't as high. Offer your customers a discount, either when they make a payment in advance or pay their invoices on time.
Offering additional incentives without being required to pay anything or the exchange of a promotional gift item may encourage people to keep up to date with their bills. The incentives should be introduced at random intervals and occasionally changed, to make the prospect of paying for services and goods more enticing.
Contact company cashflow protection companies to learn more.