Offer incentives to pay on time
Clients may respond positively to being offered a discount, or incentive to pay on time. Although you are effectively giving up part of the value of what you are owed, it might be less than the cost of waiting to be paid. The costs of paying staff to chase payment, sending overdue notices, and rearranging your own business finance may be less than the cost of the discount that you offer.
Automate the process
If you have clients who are supposed to pay the same amount every month, investigate the opportunity of automating the payment process. One way to help ensure timely payment is to have direct debit authority. This may help to remove the human error of clients simply forgetting to pay.
But what if they still don’t pay?
Unfortunately, some clients will still refuse to pay on time; this can have a negative impact on your cash flow. However, there are options available to overcome this hurdle and help your cash flow continue smoothly. One way to achieve this is to use invoice financing. Many accounts receivable financing companies can have the money transferred to your bank account within 24 to 48 hours depending on circumstances.