In running your small business, you have many challenges that await you on an almost daily basis.
One of those challenges is making sure you receive customer payments on time.
Although that should not prove to be a very difficult task, some business owners know all too well how their financial books can get screwed up in a rather short amount of time without regular customer payments.
That said it doesn’t hurt to review your payment processing plan from time to time, looking to see if there any shortcomings, along with how to fix such issues.
For those business owners not dealing with walk-in customers on a regular basis, you typically then get compensated for your goods or services via mail, phone, or through your online store (if applicable).
This means sending each customer an invoice, typically with a due date on it. The problem becomes when some customers are failing to meet that deadline you give them for payment. When this happens, your financial well-being can begin to look a little shaky.
So, have you avoided falling behind on customer payments?
Have a Simple Process in Place
In order for your small business to regularly sidestep not getting paid on time, keep these tips in mind:
- Schedule – Most importantly, are you sticking to a regular payment schedule? If not, you are setting yourself up for potential troubles. For example, if you regularly bill customers at the end of the month, do you occasionally get so busy that you forget to do this? Unless you have an employee handling your financial matters, the responsibility then typically falls on you. Keeping customers straight, knowing the exact amounts they are to be billed, organizing invoices etc. can become cumbersome. Always do your best to stick to the schedule as much as possible, lessening the odds you will run into late payment issues;
- Invoicing – Keeping your invoices updated and making sure they get out in the mail or online regularly, that can become a cumbersome project for some small business owners. To lessen that problem, make sure you have a simple process for doing invoices. It is much easier to create a free invoice, and then send it off to the individual or business owing you money. Make the invoice easy to follow along with (due date, when it was issued, how to make payment, where to send the payment to etc.);
- Deadlines – In running your small business, you need to be firm with payment deadlines. If a customer is having trouble meeting his or her bill requirements, you can consider a payment plan as an option. Do whatever you can to encourage them to even pay a little over nothing. Remember, not getting compensated for your goods or services prove to be the last thing you want to have to deal with. It creates problems on several fronts, notably your revenue stream. The last thing you want to resort to is going the collection agency route, but it sometimes is all that you are left with;
- Credit cards – Sure, there are still some small business owners (typically mom and pop shops) where cash payments remain the norm. If that works for your small business, fine. What could work even better is accepting credit card payments. Credit card payments typically make the payment process easier for many customers. Also keep in mind that consumers typically will spend more with a business if they use plastic instead of cash. Various credit cards also offer rewards in using them, giving consumers more reason to go plastic over cash.
As the years go by in running your small business, you will become better educated at seeing what works and what does not work.
One thing that most small business owners will tell you does work is being organized.
Part of the organizational process is making sure you do your invoicing on a strict schedule. Otherwise, you open the door to all kinds of potential problems, problems that likely could have been averted simply with a little bit better planning.
Don’t be that small business owner that ends up having to close his or her business due to the fact they fell behind on receiving payments.
About the Author: Dave Thomas covers small business topics on the web.