Cash is king as they say. Yet, some businesses don’t have aneffective cash collection process in place to make sure that their clients paythem on time. It’s very easy for businesses to become relaxed after the salesagreement is signed. However, when they aren’t collecting cash for goods orservices rendered on time, they are essentially extending credit to theircustomers. Find out how to get paid quickly.
Improve cash collection
All business must have a process in place in which their customersknow the payment terms upfront and the policies that must be followed. Any cashcollection process with lenient terms is a recipe for disaster. As they say, ifyou give an inch, they’ll take a mile. Of course, you don’t want to rub apotential or existing customer the wrong way, but that shouldn’t be a problemif it is clear what the payment terms are upfront.
During the cash collection process, it’s also important to becompletely objective and not let your emotions get the best of you. Calling aclient up screaming will not help you get paid faster. Rather, follow-up withthe client if they haven’t processed payment to make sure they received theinvoice. It’s quite possible that they may have overlooked the invoice andnever meant to delay payment.
If you haven’t tried this in the past, you may want to include anincentive for paying within a certain amount of days. You would be surprised,but even offering as little as a one or two percent discount, can ensure you’repaid on time. You can even take it one step further by charging late fees forthose that don’t pay on time. This strategy is only effective if the late feesare disclosed and communicated to the client upfront. You can even include latepayment fee information on your invoices. Please note that some states havelimits on how much you can charge in late fees.
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