8 Proactive Steps Toward Getting Paid on Time
Categorised in: Our Blog
It doesn’t matter how big or small your business is – in order for it to function healthily, you need to get paid. At Summit A*R, with our 20 years of front-line experience in debt collection for businesses just like yours, we understand that concept intimately.
It may seem counter to our business model to offer proactive steps toward getting paid – after all, we are a commercial debt collection agency proficient at getting late payments. But Summit A*R is a different breed of commercial collection agency, and our first priority is helping businesses get their cash flow back. And, in that case, it’s true that an ounce of prevention is worth a pound of cure.
In this article, we are going to run through some preemptive, proactive steps your business can take to ensure prompt and reliable payments. Of course, despite your (or anyone’s) best efforts, you will run up against late clients, and in that case please don’t hesitate to call Summit A*R collection services for help – it’s what we’re here for, and it’s what we do best.
Hire a Motivated Accounts Receivable Clerk
If your business has someone from accounting pulling duty as the accounts receivable clerk – as is the case in many businesses – they might be less-than-motivated to do a thorough job. AR clerk is an entry-level position, after all, and it’s often best filled by someone eagerly looking to break into an accounting career path.
You want your AR clerk to be motivated, to chase down payments, resolve discrepancies and verify payments. But, be warned: if they get good enough at it, they might eventually come work for us!
Find the Right AR Software
Bookkeeping software has only become more sophisticated in the past decade. Utilizing the right software can help automate time-consuming processes, and go a long ways toward ensuring that your business stays on top of its accounts.
Diving into the (admittedly) complex world of AR software can seem daunting; for a succinct explanation of the software, as well as reviews of the top apps, this Finances Online list does a good job. They recommend FreshBooks as their top AR software, a sentiment echoed elsewhere on sites like PCMag and Capterra.
Work in a Late Payment Fee
Late payment fees can be an effective way to remind clients to pay on time. After all, just like you, they don’t want to waste money. In some cases, however, a late payment fee can push a client further toward delinquency – the thinking behind this being that the more money they owe, the more they will try and evade the payment altogether.
If you work in a late payment fee, and a client misses the payment deadline, quickly call us; our commercial debt collection agency is particularly adept at recovering difficult debts, with recovery rates nearly double the industry average.
Or Incentivize Early Payment
Another tactic for getting clients to pay on time is incentivizing early payment by knocking 1% or 2% off the price, a term that you would want to clearly stipulate upfront. Don’t think of this as losing money; rather, think of it as a built-in hedge against loss. It’s also a softer approach than the late payment fee above.
Protect Your Cash Flow with a Deposit
This idea probably flies better with first-time clients than repeat, established clients. Business.com has some good thoughts on when – and if – it’s appropriate to require a deposit. For first-time clients, with whom you have little recourse for action should they jump ship, it is not a bad idea to require a deposit. This is especially true for small businesses and startups, who need to protect their cash flow at all costs.
Broaden Your Methods of Payment Accepted
The more available and accessible you can make the payment process, the better. You may still have your preferred method of payment, but it is best to be open to multiple methods: checks, e-transfers, PayPal, etc. A late-paying client can easily turn your lack of payment acceptance options into a legitimate excuse for lateness; don’t give them this option out.
Aim for Clarity at Every Step
In the contract, in the invoice and in the follow-up calls and/or emails be crystal clear about what is expected of them and what is expected of you, as well as the duties and bounds of the client relationship. Clarity is not only an effective preventative measure against late payment, but it is also very helpful in the event of late payment or delinquency. It allows your commercial debt collection agency to go to them and point out, in no uncertain terms, their financial and legal obligations.
Get Summit A*R Is in Your Corner
At Summit A*R, we take a diplomatic approach to collection, ensuring that we do not fray the delicate relationship you’ve built with your client(s). Our experience working as both a first- and third-party agency for businesses has given us a unique perspective in the industry and allowed us to be effective in our recovery without sacrificing your client retention rate.
The quicker you can get us in your corner, the better. Whether it’s your first time working with a client, or the 50th, allowing us to manage your collections sends a powerful but tactful message, and can help guarantee prompt payments going forward.
These are just a few of the ways that your business can be proactive about receiving payment. It is true, however, that even your best-laid plans don’t always pan out the way you want them to. For those times, when a client is late, delinquent or evasive, know that you always have Summit A*R in your corner. In fact, we even offer pre-collection services, so you can outsource this entire busy, unpredictable process to us, relieving your AR team of some stress. Feel free to peruse our website to learn more about us and give us a call to chat with one of our collections experts.