Boost Your Business Cash Flow: 5 Tips for Getting Paid Faster by Customers

Cash flow is vital to any small business. If customers are not paying on time or you wait too long for a check in the mail, it's time get paid sooner.

These five tips will make it easier for you to get paid quicker by customers and improve your cash flow.

Here are 5 ways to get paid quicker by customers

1. Early payments eligible for discounts

Clients can get a discount for paying early. This is a win-win situation for both the client and your business. Clients receive a small discount which improves their cash flow. Your company also gets their money faster, increasing your cashflow. Early payment discounts, also known as prompt payment discounts, are usually a small portion of the total invoice amount.

Offering discounts to clients is a great incentive to pay early and reduces the chance of customers not paying. This promotes goodwill between your company and your customers and increases your chances of repeat business.

It is important to choose the right customers who receive an early payment discount. A large invoice can severely reduce your profits. Beware that customers may take the discount offer even after the deadline for early payment.

Customers who pay with credit cards are not eligible for early payment discounts. This is because the credit card companies charge fees.

It is important to make sure that the discount is accurately recorded in the company’s accounts receivables program. This will ensure that it does not appear as though the customer has not made the full payment.

2. Customers can be charged late fees to get their money faster

Late fees are less of a punishment and more of a reward. This can help you get paid quicker. At the beginning of any transaction or agreement, inform customers about the late fee. The invoice will also include the fee structure. Late fees are calculated by an interest calculator. The cost is determined based on how late the payment was.

You should be aware that the maximum interest rates can vary according to each state's useury laws. Before setting your fees, consult your attorney or accountant.

3. You can get paid in installments

They are usually used for larger invoices but you may consider offering an installment plan to some customers. Your business can improve its cash flow by receiving half of the payment upfront.

The money is also known as a "good faith payments" and serves as a security deposit towards final price. Good faith payments are usually non-refundable and must be clearly documented in writing. It is more likely that the final payment will follow after a good faith payment has already been made.

4. Remind customers who are behind on payments

Regular reminders regarding payment due dates can help increase your chances of getting paid quicker. An automated accounts receivables program can be easily set up. To send an overdue notice to your customers if payment is not received on time, set up your invoicing program. Your customers will be more likely to pay if you delay payment reminders.

Always include a copy the original invoice and details about the purchase. Also, reminds should contain the amount due and payment terms. You should also list the payment methods that you accept, and the email and phone number of the person who will be contacting you about the invoice.

5. Customers can pay how they like

It is important to offer as many payment options as possible because customer preferences vary so greatly. A new report about consumer payment preferences in 2021 found that debit cards and direct bank debit are the most preferred ways customers pay. Customers prefer to set up automatic payments when there are regular payments.

Age preferences also differ. Older customers prefer to pay with credit cards, while younger customers prefer digital and mobile payments that withdraw money directly from their bank accounts. You'll get the money faster if you make it easy for them to pay you, such as by directly charging an invoice.