During the early months of the COVID-19 pandemic, the average time between when a small business issued an invoice to a customer and when the customer paid that invoice increased dramatically by an average of 6.4 days between February and May. This increase meant it took an average of 37.2 days for small business to receive payment. Source Zero. In addition to falling revenues, these delayed payments also intensified the cash flow stress faced by businesses.
Late payments can cause a variety of issues for businesses, especially their cashflow. For any business, managing cashflow is an essential part of its success; if the money is not coming in, but they still have to cover expenses such as wages, facilities and stock, then they run the risk of running out of cash and ultimately, being forced to fold their operations.
Here are some of our top tips for how your business can reduce late payments:
Be prompt with your invoice
Invoice immediately, making sure all the information is accurate and clear. Prompt invoicing when you are fresh in a client’s mind can help to speed the process up.
Provide multiple options for people to pay you
Make it easy for your clients to pay you by providing a payment portal with several, easy options for them to pay you, including PayPal, Apple pay, Opayo and BACS transfer.
Put terms and conditions in place
Provide clear payment terms that form a contract between you and other parties. This will make it easier to demand the payment once it is due (and as it is legally enforceable!).
Charge late payment fees
Within your terms and conditions, set out your late payment charges. This will deter clients from delaying their payment, and if they do, at least you will be compensated for this inconvenience.
Ensure that regular reminders are sent out for all overdue payments. Sometimes, people are distracted and forget to pay their invoice; a gentle reminder might be all they need.
The good news is that all these tips can be easily applied with an automated payment processing solution from ALIGN. Implementing a cloud-based payment process with ALIGN will help to track your invoices and will provide valuable end-to-end payment visibility. Allowing you to see when a client opens an invoice, when they have paid and if their payment is overdue – providing complete visibility on your cash-flow position.
An ALIGN Ecosystem integrates various cloud applications and is available as a subscription service, tailored to the specific requirements, budget and environment of each client. With minimal upfront costs!
An ALIGN Ecosystems can provide endless, integrated, and automated capabilities out of the box, to include payment portals, the provide automated payment processes; requesting payment, reminding clients of overdue payments, and applying interest to the client’s account, automatically if they do not pay within the set terms.