Speed Up Timings of Payments
First things first – speed up the timing of all receivable payments. Don’t make the mistake of billing your clients at the end of the month – instead – move to the first date of each month. If that is not possible, move up to the second week of the month.
Just make sure you are making progress towards the first day of the month and not away from it. You can also change your fixed fee arrangements. Also, if you don’t have a fixed fee, you will want to get a fixed fee in place and move it to the beginning of the month.
The next thing that you can look at is to make contractual changes. As a small business, you might have unknowingly locked yourself into a contractual agreement that you can only do things the way you are doing them now.
So, look again at your contract to see if you have actually locked yourself into anything, and then change your contract going forward to allow yourself some flexibility.
Take Action Now!
Take action and enforce the late fees that you tell people and that is also part of your policy. If you don’t take action and enforce the late fees, people will use you like an interest-free credit card or loan. Don’t let anyone use you like an interest-free debt.
Also, if you have trouble collecting account receivables, this could be a major problem. You might want to hire the best bookkeeping services to ensure all account receivables are collected on time and that your policies for late fees are enforced – however – you must be willing to take action first.
Put the late fees at the bottom of the invoice, telling the clients exactly how much it is. Usually, the late fee is one percent of the total of the invoice per month. So, add the policy of late fees or payment to the contract in the form of a policy and tell people that this policy is coming.
Send Notifications
If you are having trouble collecting account receivables, you will want to send a notification ahead of time as a reminder. Use the notification as a warning that they might have to pay extra if they are late. By doing so, you will remind the potential clients about your new policy and about the late fees fine. You will tell them that you don’t want them to incur those fees, which is why you are sending them a notification as a reminder.
This way, you can ensure that your clients make timely payments. If they are still late – for instance – they are two days late, you can waive it for one time but only if you want to. It all comes down to your policy and if you internally want to waive that. This way, your clients will be so grateful, and they will always pay their invoices on time going forward.
