During these uncertain times brought about by the COVID-19 outbreak, many businesses are now faced with a significant increase in late payments by their customers, forcing a strain on cash flow. In this article, we will look into how businesses can deal with late payments and how you can reduce the likelihood of delayed payments.
Know Your Customer
Before onboarding, your customer, ensure you have done sufficient level of credit checks (via credit bureaus, the local chamber of commerce, bank, and trade references). This will help you assess whether or not to offer credit terms to your customer. This exercise will also need to be carried out on a regular basis to manage credit risks, and reduce late payments and bad debts.
Reducing Late Payments Through Active Communication
Active communication with your customers is the key right now to ensure you are on top of your collection process. Knowing when the invoice can be issued to your customer and when it falls due is vital. It is also important to know when you can expect payment from your customers as many of them may be temporarily shut down due to the ’Circuit Breaker’.
Even worse, some of your customers may have gone into administration. Proactive communication may help you get your invoice to the front of the queue and increase the likelihood of your invoice getting paid.
Offer an Incentive to Your Customers
During this difficult time, you may want to consider offering an early payment discount to your customers to increase the chances of getting your invoices paid to you on time (or in some cases getting paid at all). This will help you safeguard your cash flow and reduce further administration efforts in collections at later dates.
Ensure Your Invoice Details Are Correct and Payment Terms Are Clear
There is nothing worse when payment is delayed due to incorrect or mismatched information on the invoice document. Ensure information on your invoices are correct and complete (nothing is missing or omitted), especially information that helps your customer match their records (e.g. PO number, Contract ID, Delivery Order ID, etc). Clearly stating the agreed payment terms on the invoice and when payment is expected can help your customers prioritise and process the payment as well.
Consider using an accounting tool that can automate this process to reduce any possible errors.
Be Flexible with Payment Methods
Offer a variety of different ways for your customer to pay you to increase the likelihood of getting paid. For example, you could offer options like bank transfers, cheques, PayNow, or credit cards. Do not forget to include clear instructions on each payment method to make it easy for your customer to make the payment. Have your contact details available so that your customer can contact you if they have any questions.
How InvoiceInterchange can help with Late Payments
It is quick and simple to set up the facility and access funds in your outstanding customer invoices. This means you can obtain the cash flow you need when you need it for your business. With InvoiceInterchange, you get:
- Quick drawdowns within 24 hours
- No contract lock-ins, flexible pay-as-you-go
- No hidden fees
- Personal customer service