Few things affect the cash flow of a small business as much as slow-paying clients. Besides, dealing with this type of situation is stressful and time-consuming, resulting in even more resources drained from your business.
Use the following strategies to prevent delays in payments, or to handle them more efficiently when they occur.
Offer Discounts for Paying Early
A small discount of 1 or 2% for paying early can be enough incentive to change the habits of your slow-paying clients. If this strategy works for you, you can even incorporate it as a selling point to promote your business. However, make sure to implement measures to avoid clients who may want to get the discount while paying late anyway!
Impose Late Payment Fees
A system of fees can also be effective in deterring clients from falling behind in their payments. Note that if you opt for this alternative it’s wise not to exaggerate with the fees. By going overboard, you run the risk of damaging a valuable business relationship because the other party may feel that you are piling on them.
Consider Extending Deadlines
Depending on the specific situation, extending the paying deadline is also an alternative. Many businesses are grappling with the impact of the coronavirus pandemic, and they simply may not be able to make their payments on time. If an otherwise dependable customer is experiencing temporary financial problems, consider using this strategy to build your relationship with them.
Use Technology
Dealing with late paying customers can be time-consuming, so consider adopting solutions that automate invoices and follow-ups. These programs send invoices but also late payment reminders, accelerating customer payments and allowing you to free up time to focus on more strategic tasks.
Electronic payment options, on the other hand, make it easier for clients to pay you. Make a realistic assessment of your payment processes and streamline them to ensure that doing business with you is as simple as possible.
Factor Your Accounts Receivable
Factoring your accounts receivable is a good way to deal with clients who are dependable but slow to pay. When you factor your receivables, you sell them to a company, or factor, that provides you with a sum upfront and gets paid from your client usually within 30 to 60 days. This strategy offers several advantages for your small business:
- You don’t have to worry about the collection process
- You get the money RIGHT AWAY
- Allows you to focus on your core business
- Simpler than other forms of financing
- It creates no debt
All of this for a small percentage of the invoice!
At ACS Factors we are able to advance cash on receivables for companies anywhere in the U.S., so you can have the cash flow to keep your business moving forward.
We are located in Upland, California, and have many clients in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley and Moreno Valley. Reach out today by email (info@acsfactors.com), telephone (909-949-5599) or through our social media accounts on Facebook, Twitter and YouTube to learn more about the benefits of turning your invoices into immediate cash!
