One of the hardest things small business owners may deal with is chasing customers collect payments from customers. And let’s face it, collecting payments is the most important thing to keep your business running. 82% of businesses that fail say that cash flow issues were a main factor, and there are many things you can do to minimize that likelihood for your business.
Whether it takes too long to receive payment, your invoicing processes could use an upgrade, or you have repeat offenders that pay late, learning to collect payments in a professional and timely manner is crucial to your bottom line.
Top 7 tips for Collecting Payments From Your Customers
1. Collect Payment from Customers Upfront
Though it may feel uncomfortable, asking a customer to pay upfront for a service you provide is completely legitimate. You can collect payment upon booking in order to secure the customer’s appointment or ensure the project will be completed on time. Whether it’s asking for a deposit or offering a discount to those who pay upfront, there are many creative ways to ask for payment before the transaction is completed.
2. Provide Clear Terms and Conditions
Do you have a late fee? How will you accept payments? When do you expect to get paid? All of these should be explained in detail to every customer. It helps if you have a document your customers can read with all the terms and conditions listed clearly, or even list them on your invoices. Either way, it’s important to communicate these terms to your customers as a way of aligning expectations and minimizing late payments.
3. Accept multiple forms of payment
Collecting payments from customers can be made infinitely easier if your business is able to accept multiple forms of payment. Sure, cash and credit cards are great, but online payments and mobile payments are the next big thing. You can use an online payment software like vcita to send payment reminders and collect payments using PayPal, Venmo, Square, or Stripe, giving your customers the ultimate convenience when it comes to making payments. This convenience translates into faster payments and a better customer experience overall.
4. Send professional follow-up emails
Emails are still one of the best ways to reach your customers and collect payments from customers. Dropping them a follow-up email reminding them to make a payment is an effective way to get their attention. Here are a few tips for an effective email follow-up strategy:
- Keep it professional – not personal
- Make sure you have a strong subject line (ex: Payment Reminder: [Invoice #])
- Be sure to attach the unpaid invoice
- Include a link to where they can pay (if you have the right software to help you do that)
- Remind your customers of your payment terms
You’ll want to send the first payment email reminder a few days after the invoice was due, and then a follow up email a few days after that. If the customer hasn’t paid in a few months, it may be time to see how you can escalate matters.
5. Use online payment software
As mentioned above, an online payment software can help with more than just collecting payments. A strong online payment solution, like vcita’s, can help you automate invoicing, provide your customers with a simple payment link enabling them to click and pay, securely store credit card information for future use, and more. All this in the name of a superior customer experience and streamlined payments for your business. Collect payment from customers with ease
6. Be flexible with customers
Sometimes you might find that your terms and conditions could be a bit rigid for certain customers. For example, instead of collecting 50% of the final payment upfront, your customer might do better with collecting 25% over the span of 4 months. That’s not to say that every customer should stretch their payments out, leaving you waiting for those funds. However, if you see a customer struggling to pay, you might consider discussing a more flexible payment option so that you can finally start to get paid.
7. Incentivize paying on time
Customers love incentives and they’ll do their best to get them. You can offer a discount for early payments, or even offer your customers credit towards future transactions, all because they consistently paid on time. This will not only help customers feel more obligated to pay, but will also increase repeat transactions as customers will feel valued for conducting business with you.
Get paid on time, every time
Sure, it’s uncomfortable to chase a customer down for payment, and it’s one of the more difficult things small business owners need to do. By making the process easier on your customers and offering them a superior experience you can, in turn, make the process easier on yourself. Hopefully this list of tips will help you expedite your business’s payment processes and get you paid faster.
This blog post was written by Danit Ianovici. Danit is Vcita’s content marketing whiz and a previous small business owner with a creative mind full of insights for our community. She is a native New Yorker turned Tel Avivian who loves helping small businesses succeed by way of innovation and financial awareness.