5 Ways to Encourage Clients to Pay On Time
October 23, 2020
You think closing the sale seals the deal? Think again.
Most companies find that the most treacherous part of the sales process is getting your clients to pay on time. After a sale, nothing is set in stone until you get paid. Not receiving payment on time can be deadly especially if you expect that money to come within a certain schedule. It’s one of the most uncomfortable and awkward situations in business because you toe the line between keeping a valuable customer and losing a client.
So what to do when your clients notoriously delay payments despite prompt reminders? Here are my top 5 tips.
Tip #1: BE CLEAR WITH PAYMENT TERMS, EXPECTATIONS, and REMINDERS
From the get-go, make sure that your client’s key people know their payment schedule. The last thing you want is confusion from their end and an excuse not to pay on schedule. Make it clear that they have to pay X amount on these dates.
Be prompt with communication. Once you let a scheduled payment pass, it sets a precedent. It sends the message that not paying on time is ok. Thus, be consistent from the beginning.
Tip #2: SEND YOUR INVOICE TO THE RIGHT PERSON
Large companies often have large organizations. The person you talk to for sales and marketing may not be the right person to process your payment request. So make sure that invoices are sent to the proper person.
Tip #3: REQUEST FOR PAYMENT OR DEPOSIT UPFRONT
This may seem like an awkward request for older clients but if you are giving them good prices, an agreement to pay a portion of the bill is a sign of good faith on their part. It also indicates that you will likely get paid upon delivery. This practice improves cash flow and trains the client to pay prior to having their project completed.
Tip #4: PROVIDE INCENTIVES FOR EARLY PAYMENT
You may offer a discount on the total invoice amount. This adds up as a cost advantage to your client.
Tip #5: BE FLEXIBLE WITH PAYMENT METHODS
Most clients pay via check, direct deposits, or bank transfer. But by experience, flexibility with payment types makes things easier. Offer payment via credit card, PayPal, or other online payment systems that don’t close when offices do. Give them little reason for them not to pay on time.
Of course, it goes without saying that keeping good rapport with clients is key. Nurture your relationship by keeping good communications lines. Be diplomatic and understand that this is a partnership. If business is volatile for them, perhaps you could offer a more flexible scheme for a set period. That way, they know you’re in it for the long haul and they wouldn’t think twice when a competitor tries to grab your business away from them.
Got other tips to encourage customers to pay on time? I’d love to hear from you! Do share and comment below!