Worrying whether customers will pay you on time is a continual concern for business owners.
Late payment can lead to cashflow issues, unpaid supplier bills and the need to dip into your own pocket to cover your operational expenses. If you can improve the speed and likelihood of customers paying on time, that's good news for your accounts receivable targets and the company's overall liquidity and cashflow position.
Speeding up payment times
A sale is not a sale until the customer has actually paid you. Whether you’re an online business taking payment through your website, or a B2B company that sends out monthly invoices, you need the comfort of knowing that payment will be fast, smooth and frictionless.
Here are 5 tips for making sure that customers pay you as seamlessly as possible:
For eCommerce businesses, offer payment gateways to simplify payment – when a customer gets through to your checkout, it’s vital to make payment as easy as possible. Some customers may prefer to pay on a card. But offering a choice of payment gateways gives the customer more options. Instead of forcing customers down one route include payment gateways like PayPal, Stripe, Apple Pay or Google Pay.
For companies using e-invoicing, put payment buttons on your electronic invoices – if you send out e-invoices to your customers, including payment buttons makes settling your bill as easy as clicking that button. A payment button that’s linked directly to Paypal or Stripe removes several steps from the payment process. It’s straightforward and quick, getting you your cash without the hassle of BACs payments or transfers.
For businesses offering subscription services, automate those customer payments – when you’re offering a recurring, monthly service, you don’t want the hassle of sending out those invoices and getting involved in cash collection. Think about automating the creation of recurring invoices in your accounting software, and get your customers to sign up to a Direct Debit platform, like GoCardless. Money is taken automatically on a pre-agreed date and the transaction matched in your accounts.
For retail companies, use card readers that sync with your accounting software – if you’re running a busy cafe or retail space, your customers just want to tap their card and go. Integrating your card reader with your cloud accounting software removes all the tedious data entry and adding up of receipts. With a direct API between your POS card reader and your accounting platform, all the data is shared automatically.
For all B2B businesses, send your invoices out as early as possible – the sooner you issue an invoice, the sooner the due date will come around. If you’re working on a project basis, split the fee up into chunks and invoice out at key milestones throughout the project. It’s also a good idea to make your payment terms clear and enforceable on every invoice. Payment within 14 to 30 days from the invoice date is a good standard to aim for (though 60 days, or even 90 days, is possible in some industries).
Talk to us about speeding up your payment times
Fast payments improve your cashflow position and remove the need for time-consuming and stressful debtor chasing. By following these five tips, your customers have the smoothest route to paying you, and you get the cash that’s owed to your ASAP.
We’ll help you review your payment process and cash collection to look for the main areas where you can make improvements.