An SME owner? Here’s how to get paid faster
Late payments are every SME’s bugbear. No business likes having to chase after payments because it takes up a fair bit of time and resources. Cash flow often becomes an issue that impacts operations and taking on new projects could become tricky. It’s a costly affair that can be mitigated, and here are some of our top five tips:
1. Implement a shorter payment term
Shorter payment terms help in getting paid on time. With the current standard payment terms of 30 up to even 90 days, there’s a tendency that your customers may overlook the dates. We recommend setting payment terms to two weeks prior to the expectant date of getting paid.
2. Provide your customers with more payment options
Gone are the days payment options are only limited to cheques. The advancement of technology meant myriad of ways to pay a bill. It shouldn’t take more than 3 steps. Find out what works best for you and your customers, use the options and it will eliminate the hassle of even trying to pay a bill.
3. Follow up on payments due
Are you guilty of operating on a ‘trust’ basis; relying on the assumption that your customer will pay on time or eventually and feel somewhat ‘embarrassed’ about having to ‘chase’ after payments. There should not be any reservations when it comes to following up on payments due to you. It’s good business practice to follow up on invoices sent out diligently and send out friendly reminders if payment hasn’t been made. In fact, it could be the case of having overlooked the payment dates and your reminder would be very much appreciated.
4. Impose a late fee
A common practice not only exclusive to banks, charging a late fee discourages late payments. It also acts as a reminder for your customer to make timely payments or run the risk of paying ‘more’ than they should have.
5. Leverage invoice financing
Optimising your accounts receivables to free up cash flow allows you to access working capital while waiting for payments due to you. Peer-to-business financing platforms like Validus help businesses leverage their account receivables through invoice financing. This allows businesses to get paid earlier on their invoices (up to 80% of the invoice amount) quickly and easily, boosting cash flow for operational expenses or for expansion.
With no need to pledge any assets or collateral, businesses can apply for Invoice Financing through a simple application process. Learn more here →