Getting Paid: Ensuring Customer Payment.

20 11 2009

“Show me the money!”

Getting paid is surely a top priority for any business (especially in this economy), but it’s also one of the hardest things to accomplish. Making sure that customer transactions are seamless and reliable is a difficult task, but one that is crucial to mastering with regard to operating your business.

Finding more efficient ways to ensure payment is an issue for many entrepreneurs, making it hard to get a handle on cash-flow and budget projections. In fact, according to the latest American Express OPEN Small Business Monitor, 60% of business owners are experiencing cash-flow issues and 26% are now worried about paying their bills on time. Therefore, it’s increasingly important to recognize the tools and policies that can help you ensure customer payment, before things get out of control.

First, it’s important to take inventory of the payment methods you do offer, including those which suit your business best and cause you problems. You might also familiarize yourself with guidance provided by the government on accepting cash and checks. (For example, if you accept cash payment of over $10,000, the government requires you to file Form 8300 with the IRS to capture more information about the buyer.) And with regard to accepting checks, you should probably make sure that your business is rubber-check proof.

As many business owners know, performing payment collections is a necessary evil of conducting business. Here are some tips to make sure your customers pay their bills:

  • Getting paid starts with the invoice – notably writing them and submitting them in a timely manner.
  • Keep your invoices clean.
  • Beat the payment deadline of your customers – know the accounting practices of your customers and beat their payment cycle when submitting invoices.
  • Be prompt with your follow-up – timing your courtesy and collection calls.

Even if you practice due diligence when it comes to invoicing and requesting payment, you may need to indulge in a little creative thinking. The Wall Street Journal recently posted an article about the three best ways to make sure customers pay – in this article, the following methods were recommended:

  1. Figure out your customers’ payment history – ordering an inexpensive report detailing a company’s payment history and profile.
  2. Make it easy for them to pay.
  3. Try mobile devices – supplying field workers with cell phones equipped with Bluetooth devices that allow credit cards to be swiped or punched in manually, granting fast and easy payment.

Identifying more efficient ways to accept customer payment and taking the time to get to know your customer’s themselves is no easy task, and it certainly takes time. But the more you know your cash-flow operations, the easier it will be to identify areas of risk and areas to improve. Speeding up your cash-flow deposits will surely make a wealth of difference to your bottom line.

…And if certain high-maintenance or late paying customers cause you to spend more time on them than it’s worth, you might consider filing for customer divorce.

Photo courtesy of Walter Knapp.

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2 responses

20 11 2009
Arden

Sarah,

Great post! Really helpful information. This would make a great article for Biznik too as all those small business owners need this information.

Thanks.

24 07 2010
Accounts Receivable Riskiness « The Company Line: BLOG

[…] previously written about “Ensuring Customer Payment” and the importance of due diligence on a business owner’s part for following up with […]

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