Starting a business is a labour of love, dedication and commitment, and it involves building a myriad of strong business relationships. Among those associations are two that stand out: the relationship between you as the business owner and your suppliers or other businesses, and the relationship formed between you and your customers.
Today, we will be focussing on the relationship between you and your clients and more specifically, how to ensure that your clients are making payments on time. Because one missed payment, one forgotten invoice, or one overlooked email could be the difference between a thriving business and one that doesn't survive the winter.
So, to help you cement those financially-positive relationships and to ensure that money is always hitting your account when it’s supposed to, we’ve laid out 15 fool-proof ways for you to always get paid on time - and in full. Let’s dive in.
15 Ways to Get Paid on Time and in Full
1. Lay Out the Ts & Cs
We begin our list with a very simple concept: write it down. Create a contract or terms and conditions of use that explicitly lay out your payment requirements and expectations. Be direct in your payment collection policy, have a clear scope of consequences for late or non-payments, and make room for the communication of changes in the scope of work as they happen.
By having detailed and easy-to-understand contracts and policies in place, customers will always know what is expected of them and you can hold them accountable for any missteps.
2. Scope of Consequences
While you don’t want to deter new customers from doing business with you, you also don’t want any non-payments to affect your day-to-day business dealings. Your scope of consequences could include penalties for late payments, incurring interest on all unpaid invoices, and even legal action if you’ve tried everything and the situation is still not resolved.
3. Communicate Policies to Customers
It’s all good and well to have policies in place that protect your business against non-payments, but the stipulations mean nothing if your clients do not know what they are. Be sure to have your terms and conditions visible and/or accessible on all your platforms, and send out emails to new customers that clearly state when and how you expect payment to be received.
4. Invoice Immediately
Once the work has been completed or the goods have been delivered, invoice your client immediately. Most humans are like Dory: well-intended with horrific memories. Late payments may not be malicious and your clients may have simply forgotten to pay you. Invoicing immediately ensures that you remain top-of-mind for fast payments.
Your invoices should also be as detailed as possible and should include many of the details that are found in your contract and Ts & Cs. No one likes surprises, none more so than customers who are about to part with their hard-earned cash.
4. Bill Upfront
Today’s society has fallen in love with taking out credit and having credit options available. But if offering credit doesn’t work for your business model, then don’t do it. Rather ask your customers to pay upfront for your goods and services. Cash for goods/services is still a model that works well, and one that should be used by you to make sure that cash flow is never a problem for your business.
5. Accept Multiple Payment Options
One way of ensuring payments is by making it easy for clients to pay you. Clients are more likely to make fast payments if their preferred payment option is available to them. So, give the people what they want.
Here are some payment options that you can offer to customers:
- Credit/debit card payments: Use an iKhokha card machine for seamless card payments.
- iK Tap on Phone: Turn your phone into a card machine and instantly receive payments with iK Tap on Phone.
- Payment Link: Create a payment link that customers can follow to make direct payments.
- EFT: Give your customers your banking details so that they can make a secured, electronic payment.
- iK Pay Gateway: Set up an easy-to-use and secure payment gateway to accept payments on your online store.
- Bank to phone payments: It’s 2023 and there’s nothing wrong with accepting payments on your phone, such as an FNB eWallet or CashSend from Absa. The only drawback is that you will have to go to the same ATM as the sender's bank to withdraw the payment.
- Cash: For safety, it is wise to only accept smaller cash payments.
6. Credit Applications
When you do offer your customers some sort of credit facility, make sure that you get their permission to do a credit check. You will be able to submit their details to the NCR and the results will give you a better understanding of their spending habits. This will allow you to make an informed decision on whether they can take out credit from your shop.
Doing credit checks will also give you more data and information on the type of clientele walking through your doors, and you can then adjust your marketing strategy accordingly.
Want to know about funding your business? Read 15 Business Funding Solutions for Kasi Businesses in South Africa.
7. Ask for Deposits
Don’t be shy to ask for some sort of upfront payment to secure the work contract if you’re a service provider. If you stipulate that deposits are non-refundable, watch how quickly the remaining balance is paid off! No one likes to lose money, so asking for deposits is a smart way to keep your coffer filled.
8. Offer Early Payment Discounts
Honey truly is oh so sweet and in the world of business, offering any sort of discount is like giving a pot of honey to Baloo or Winnie-the-Pooh: it will be received with greedy excitement. Just make sure that the discounts you offer work in line with your budget and profit targets.
9. Only Use What You Have
If a particular order requires many tools and materials to get the job done, make sure that the client is providing them or that they have already paid for them. If you buy the materials with your own money and your client is slow to pay, that could mean big trouble for your cash flow, and it could ultimately send your business down a terrible spiral.
So, if you’re a building contractor, make sure that you have all the cement, wood, hammers, and nails, or at least all the money for the materials from the client before you get to work.
Similarly, refrain from making bonus and commission payouts to your staff if you haven’t yet received payment from your customers. Make sure that your staff have a clear understanding of the conditions under which they will receive their bonus payments.
10. Get Credit Insurance
Credit insurance means that you and your company are protected against bad debt. So, you can take out credit insurance with an insurer and, if a customer fails to pay you, the insurance company will pay you either a portion of the expected amount or the full sum.
You can find a list of reputable insurers in South Africa here.
11. Accounts Receivable Factoring
Accounts receivable factoring is when you, as the business owner, receive financing from another company to improve the cash flow of your business. The other company will pay you for all your outstanding debts while also putting pressure on your clients to pay up. They will receive the money from your customers, and you will pay them a small fee for financing you when you needed them most.
12. Be Flexible if Necessary
In business, you’re always pushing hard to guarantee the sale. A good way to do this is by being more flexible in your business dealings. We’ve already discussed how flexibility in your payment options is beneficial, but being flexible in other areas can also ensure that money is being paid when it needs to be.
You can offer repayment terms to select customers where they can make multiple small payments instead of one large transaction. You can also come up with some sort of barter system if your client is struggling with cash and if the agreement works for both sides.
Just be sure not to undercut yourself or put your business at risk by overextending in an effort to be flexible. Everyone has a breaking point, be sure not to bend too far.
13. Protect Your Business Relationships
AI has come far in leaps and bounds, often in eerily uncomfortable ways. But for better or for worse, business is still very much based on human interactions. As much as you want money to be coming in, you still need to keep the people with the money happy.
So, stay on top of all your business and customer relationships. Communication does not always have to be related to money, you could also check in with your clients on a humane level, and keep them locked in on all your latest product offerings and company developments. A client is more likely to make payment to a business that offers a personal touch and makes them feel special, than one that only sends a million spam emails about a late invoice.
14. Uphold a Professional Standard
It may seem like common sense, but it’s definitely worth mentioning again: always be professional. In whatever you do and whoever you engage with, always maintain a high level of professionalism. As the fickle beings we are, humans are more likely to respect and pay businesses that hold themselves in high regard.
Want to know how technology can help you maintain a professional standard? Check out Using Technology to Build a Kasi Business.
15. Productise Your Services
To end our list of sure-fire ways to get paid on time and in full, we bring you a cheeky little tactic that all entrepreneurs should keep in mind. To productise your services means taking standardised services and selling them like products by having clearly defined pricing parameters.
So, for a job that would normally have to be completed before invoicing, you can now charge an upfront fee for the same scope of work. That means less complicated credit issues and late payment troubles, and more money in your company’s pocket to keep the business ticking over.
Be Proactive to Protect Your Business
The best way to get paid on time is by being proactive as a business owner. Just like Waiting for Godot, nothing productive ever happens by just sitting and waiting. The onus is on you to get your contracts in place, have excellent communication, and maintain healthy business relationships in order to ensure the survival and longevity of your business.