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Are larger purchase amounts generating longer past-due invoices? Who are your slowest payers?Īs a stop-gap, you may want to consider proactively offering payment plans to customers facing payment issues. Take a further look into your invoicing data to see what’s happening by performing an accounts receivables analysis or by looking at your A/R analytics. Let’s say you start implementing some of these strategies and you’re seeing only mixed results.
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What Is Accounts Receivable Automation?.You can learn more about automating your invoicing with the following guides and white papers: Otherwise, you (or your employees) will be doing all the work manually. Evaluate Your Billing and Invoicing Softwareĭon’t forget a critical component to reducing late payment: the billing or invoicing platform your business uses must support these different types of pricing structure logic in an automated fashion. If you’re in a service-based business, it may work to allow customers to place a hold on their account until they can pay in full. Decide if an account “pause” option makes sense for your business. If you want to keep customers no matter how long it takes them to pay, you can present them with a payment plan option to receive at least partial payment. You can also look at the business case for payment plans. They may not know that you accept PayPal, for example, or they just got so used to mailing in a check that they forgot about their new corporate credit card. Let customers know that they have multiple options to pay their balance. What types of options could your business offer that might incentivize your customer to make the payment rather than ignore that unpaid invoice email? Think about ways you could help reduce late payments while they are happening. If it’s something you’re arranging after you have a large customer base, you can always go back and ask them to agree to new terms. Note that all these factors must be clearly detailed in each customer’s contract or terms and conditions. Give away a coupon for a free product or service for a certain number of on-time or early payments.Outline late fees to be charged if payments slip beyond a specific time window.
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Offer multiple payment types, including online payments.Consider discounts for early or on-time payments (regardless of payment method).Require either a partial or full upfront payment.
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Offer customers a discount if they provide a credit card (rather than a mailed check) to be billed at predetermined times.In order to remedy that scenario, ask yourself what types of payment terms could you tack on to incentivize on-time payments. Many businesses allow customers to purchase products and services on credit, which increases the likelihood of overdue invoices. You’ll want to think about how to encourage on-time payments, including using incentives, automation, and upfront deposits. If your business is plagued by late payments, it is likely time to take a 360-degree view of your business and attack late payments from all angles. The Best Option: Reduce Late Payments Altogether