Everyone wants to be paid on time, no matter what kind of business you’re in, or even personally from friends and family. But, in reality, it doesn’t always happen and problems with getting paid can often arise. As a business, it is crucial to your success to receive timely payments from your customers or clients. In fact, a study showed that 79% of business owners could not pay themselves due to overdue invoices.
If you’re struggling to get your payments on time, take a look at our tips below to help boost your collection rates.
The importance of getting paid on time
Late or missed payments can be detrimental to a business. It can affect the business’s revenue as well as risk a bad customer relationship if multiple communications need to be sent out to retrieve the funds. Nobody likes to get bombarded with messages chasing for money, so it’s important to consider better payment solutions to help:
- increase collection rates
- improve customer relationships
- predict your revenue
What causes late payments?
There can be a variety of reasons for late payments, some of them will be out of your control, but here are the most common:
- Bad payment plans – Unrealistic repayment plans via recurring payments are put in place that the client can’t afford.
- The customer doesn’t receive your invoice – Any admin errors, like late or unreceived invoices, can affect payments.
- Customer dissatisfaction – If you have provided a bad experience, for example, requesting strong customer authentication before every payment, details aren’t updated, the service or product isn’t as described, etc. then the customer may not want to pay for your service.
- Insufficient payment methods – A limited amount of payment methods, none of which being the customer’s preferred option, can deter them from paying.
How to get paid on time
If your business is falling victim to missed payments, there are a range of methods and tips you can adopt to ensure you receive timely payments.
1. Recurring payments
Recurring payments, or recurring billing, are the most convenient way to make regular payments. Once they are set up, the payments will be taken automatically on an agreed schedule. This means the customer only has to input their details once and the business can create automated invoices saving time for both parties. Managing these types of payments correctly can help to guarantee a recurring revenue.
2. Pay by links
If any payments are due, a pay by link can be sent to the customer. Compared to other methods it is less intrusive than a phone call and much easier for the customer to respond to than a letter. If your customer doesn’t get the payment processing option that’s convenient for them, there’s a 60% chance they will walk away. Therefore, by accepting pay by links, you’re giving them the option to make the payment there and then via a link on their phone can help to increase collection rates.
Having clear and transparent invoices will help make payments easier for the customer. If they know exactly what they are paying and when and receive regular, helpful updates, this will help them to keep track of their finances and get their invoices paid on time.
4. Alternative payment methods
Everyone has their preferred payment method, whether that’s via a bank transfer, debit card or credit card, or digital wallet, etc. By offering a variety of methods, you are making the payment process much easier for your customer, therefore, increasing the chance of them paying on time.
5. Build customer relationships
By creating a bespoke payment plan with your customer or a personalised product, depending on the service you’re providing, can make the customer feel valued. Also, by having open communication with transparent fees and the ability to amend the payment plan if needed is the kind of customer service that helps to build a positive relationship.
With Total Processing, we can help you bring these tips to fruition. So, if your business needs a hand to get paid on time by your customers, get in touch and our experts can advise you on the best payment solution package.
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