How Your Small Business Can Get Paid On Time

Every business owner wants to get paid on time. And in today’s economy, prompt payment is more desirable than ever. Unfortunately, it’s also more elusive. More and more companies -- both small and large -- are paying later these days in an effort to improve their own cash flow position.

That works out great for them, but not so well for you. What can you do to ensure prompt payment? Here are some strategies to try.

Getting paid starts with the accounting systems you set up. First make sure invoices are sent out as soon as work is completed or an order is shipped. Some business owners get so wrapped up in finishing a job that they forget to bill for it right away.

Next take a look at your actual invoices. Are they clear and easy to read? Keep in mind who, what, where, when, and why: Can the recipient see at a glance who sent the invoice, what amount is due, where it’s to be sent, when payment is due, and why they’re being invoiced? Often, payment delays stem from honest confusion about one of these issues. Also be sure that the invoice includes any tracking numbers the specific customer needs, such as a purchase order or your tax I.D. number.

E-billing can be a good way to get invoices out faster and to get paid faster (not to mention to save money on printing and postage). Do an Internet search or ask other business owners for recommendations of companies that can set you up with e-billing.

If you don’t receive payment on the due date, follow up with the customer immediately. Don’t be obnoxious about it; just make a quick phone call or send a polite e-mail. Tell the customer you’re following up to double-check that they received the invoice and that they have all the information they need to pay you. If the late payment was just an oversight or the check really is “in the mail,” this confirmation will be all you need.

However, if you find out that the customer can’t pay right now, you’ll need to dig deeper. Try to get a definite answer as to when they’ll send payment. If necessary, you may have to set up a payment plan so you can at least get a partial payment right away.

Be polite but firm. If you’ve built good relationships with your customers, it will be to your advantage here. They’ll be more willing to work with you if you’re willing to work with them.

If late payers are becoming a big problem for you, it may be worth incentivizing customers to pay you on time. For instance you could offer a discount if clients pay within 30 days. If you can afford it and your cash flow needs allow it, you may even want to encourage early payment by offering a bigger discount if customers pay within 10 or 15 days.

Karen Axelton is chief content officer at GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. Read more of her insights on small business at SmallBizDaily.