Across all different industries, organizations find it challenging to get their customers to pay on time. While a customer or another business owner might not think a late payment is a big deal, those delays can translate into huge problems for your company. This is especially true if you are a smaller business with a few big clients, rather than many smaller ones, but a cash flow issue can affect organizations of any size. When customers don’t pay on time, you’re put in a frustrating and stressful situation. However, there are solutions to this problem, and many of them tie in to electronic invoice presentment. By using a digital system rather than a traditional paper one, customers will find it much simpler to make their payments on time. Here are three ways you can make late payments a thing of the past:
Make the switch to electronic invoices
Not only will an electronic billing system allow you to cut costs in-house, but it’s the best way to ensure payments are made on time, every time. In fact, because electronic invoice presentment offers a quick and easy way to make payments, your customers are actually likely to make their payments a lot sooner. One study found that 50% of customers paid their electronic invoices before the paper versions would have even arrived in the mail. What’s more, nearly one-fifth of customers paid their electronic bill the same day it arrived in their inbox. You won’t have to rely on the post office or deal with a late payment because your customer forgot to mail the envelope back.
Set up recurring payments
If you run a business that charges your customers the same amount every month, you can offer to streamline the process even further by setting up automatic recurring payments. Subscription services are the perfect example as to why this works so well. Neither you nor your customers will have to remember to send something every month. It’s easier and eliminates the issue of late payments because the allotted amount will be charged to an account on the same day every month. Of course, this may not apply if your organization doesn’t operate in this manner, but for many businesses, it’s a great way to set it and forget it.
Create incentives and reminders
Little incentives can go a long way with your customers. Some organizations like to encourage early payments on invoices by offering a small discount on the invoice total. A 10% reduction in that invoice isn’t going to substantially change your overall revenue, but it can be significant for your customer. Even if they don’t end up saving a lot, the psychology of saving $10 can make them stay on top of their payments. You can even create incentives to get customers to sign up for your electronic invoice presentment in the beginning. In addition, sending out payment reminders can be extremely effective in reducing late payments. If a customer saves their invoice email for later and forgets about it, their full inbox could cause them to incur a late payment fee. But if you send out a warning notice (say, five business days before the invoice payment is due), your customers will feel you’re looking out for their best interest. While it’d be nice if customers remembered on their own, that’s simply not always realistic. Make sure you jog their memory.
Want to find out more about how an electronic invoicing can help your company increase receivable rates? Contact Information Outsource today!