* Shimbi MyBilling is now Shimbi Invoice
Every small business needs to have a regular cash flow. Cash flow is oxygen for a small business and is required to be maintained to stop the small business from dying. Although the firm takes every measure to have a regular cash flow by adopting proper invoicing techniques. Even after taking all the steps, overdue invoices is a common hindrance to the cash flow and is needed to be managed in appropriate ways.
Here are top 7 ways to deal with overdue invoices:
1. Clear Payment Terms & Conditions
This is the first step a firm should do to avoid overdue invoices. How does this help? Well, many customers would not even bother to read the lengthy terms and conditions written in the small fonts. They would not even know the last date to pay the invoice. This can lead to arguments. To avoided any such situation it is better to clear payment terms and condition at the beginning itself. The firm can do this by calling the customer after delivering the invoice or writing the payment deadline in big bold fonts.
2. Extend The Deadline
Anyone can forget the time limit for paying in their busy and hectic schedule. A customer sometimes does not pay the dues, and it is entirely unintentional. Therefore, the customer should be ringed or wired and remind him of the deadline. You can even offer an extension of the time limit for a couple of days or weeks. This will leave a good impression of the firm on the customer and ultimately your dues will be paid.
3. Remind In A Friendly Way
A customer is the biggest asset that a small business has. He should be treated in that way only. Although customer has not performed his duty by paying his dues on time, but it does not mean he did not want to. Maybe he had too much on his plate and totally forgot about the dues. The firm should make him feel special by reminding in a very friendly way. Rude behavior from your side can lead to outrageous comments and a break in the relationship with the customer.
4. Always Call
Sometimes it helps to call. Calling means you can remind about the payment personally and leaves no excuse for the customer to make payments on time. When you call the customer can easily say that he did not check his mail for a long time and therefore forgot. Therefore, the small business should call him personally just after sending an email and 2 or 3 days before the last date of payment and leaves no way for the customer rather than pay on time.
5. Penalties On Late Payment
If the customer is not able to pay even after extending the deadline and reminders, then the business has full authority to impose a penalty on an overdue invoice. This penalty should already be described in terms and conditions and duly signed by the customer. Since no one wants to pay more, the customer will pay the dues immediately, and this will maintain the cash flow of the business.
6. Take Full Payment Next Time
A customer's behavior regarding payments is very important for the small business. On time payments, benefits the small business but on the other hand, habitual late paying customer hurts small business and prevents cash flow. If a customer continues his behavior of paying late, then he should be charged fully or a good portion of the amount at the beginning of the next deal. This will benefit the business, and the overdue invoice can be prevented from the beginning which every company wants.
7. Fire The Customer
Yes, you can and, if necessary, fire the customer. Fire the customer if he is stalling the payment for quite some time now. Firing should not be seen as one customer less but should be seen as many customers more. Firing the client shows how disciplined and serious you are towards your business and do not run for the money. This attracts many customers who want serious business partners and love to work with them. This will expand your business, and the customer quality will improve.
Cash flow of a firm should never stop, and the firm should do everything it can to maintain this cash flow. However overdue is a common hindrance in the way of cash flow. Some of above ways can effectively deal with over dues.
However in a small business, an owner is responsible for doing many jobs. It's not possible to hire a person per activity such as a person is hired for generating invoices and other for account management. The owner himself do many jobs in a small business. Due to lack of resources, it's hard to have time to remind so many clients to pay their dues.
Therefore, a small business should set the process for sending the new invoice and payment reminders automatically. It will remove the headache of maintaining the record of every customer's overdue details. Many software are available for this work, for example, ShimBi MyBilling. MyBilling is very simple yet effective invoice management software.
Using such software will help everyone in the firm to concentrate on their work which is more useful than following up for overdue invoices.