The average invoice payment time across Australia is 45.1 days, according to Dun and Bradstreet's Trade Payments Analysis for Q3 2015. Many businesses will find themselves waiting for one-eighth of the entire year for their clients to pay their bills.
It hurts cash flow and, subsequently, the business's ability to plan for growth. If you don't know when your revenue is coming in, how can you plan for expenditure? Like a line of dominos, your debtors can affect your own trade payments, causing problems down the supply chain.
So, how can you encourage your clients to pay their invoices on time? Here are four tips.
1) Keep in contact
When you send your invoice, you may want to mention to the client that you will be in touch when the payment term is up. That alone may encourage time-pushed account offices to pay their bills before you have to chase them.
2) Build a relationship
As invoice finance providers, we know that you catch more bears with honey than you do vinegar. Building a relationship with your clients is a great way to keep you - and your outstanding invoice - at the front of their mind.
Meanwhile, if you have a good relationship, they'll want to avoid the friction that can occur when they don't pay you what you're owed. You might even get an invite to a free event or two - a win-win!
Keep in touch with your debtors.Building a relationship with your clients is a great way to keep you at the front of their mind.
3) Find out what's convenient for them
Does your client prefer electronic or paper invoices? Is there a certain time of the month when they're more likely to have the funds to pay? Don't be afraid to ask your clients, particularly at the start of a relationship and find out the answers to such questions.
4) Incentives and penalties
On occasion, businesses decide to use an incentive to encourage quick payers, such as a trade discount. Alternatively - and rather in rather risky fashion - others choose to give their late payers a penalty.
The first option can be an expensive way to get your money, while the latter can ruin relationships, so consider all your other options first. For instance, using a debtor finance provider like Earlypay unlocks your money almost instantly, with our high approval rate and quick turnaround one of our biggest assets.
Meanwhile, we'll protect your client relationships with our professional service. It's likely that you'll always have late bill payers, like every other business in Australia. Talk to our team if you'd like a quick and effective finance solution.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].