According to the American Express Small Business Monitor, 72% of small business owners believe effective cash flow management is fundamental to the success of their businesses, and 50% of small business owners experience cash-flow problems. 50%, that’s a big number.
One of the greatest contributors to the cash flow problem is late payment, something many businesses can’t survive.
Not surprisingly, a side effect of dealing with late payments is that businesses are forced to spend a huge amount of time chasing overdue invoices instead of concentrating on other aspects of their operations.
While it may seem on the surface that there isn’t much businesses can do (short of bringing on some hired goons, which we don’t recommend) to help the situation, there actually is.
Complete Guide to Subscription Billing.
This guide will walk through the wide range of features required to automate your recurring billing, subscription management, and payment process.
Here are our 5 Tips to Help Collecting Recurring Payments:
1. Create a Proactive Payment Process
Be upfront and explicit about your payment terms with each and every customer, they can’t claim ignorance if you make this part of the discussion before you start the work or provide the service.
2. Re-think Your Terms and Conditions
Take a close look at your terms and conditions and consider applying some changes.
Instead of having a 30 day term, switch to a 2 week term. Your payees will be encouraged to pay on time to avoid any extra charges for late payments.
Such an adjustment can also speed up your collection process, which can help you maintain a healthier cash flow.
3. First Things First
Send your invoices out right away, if you’re slow to get them out, your customers will be slow to pay. We all know that chasing a payment is not a fun job, but it is vital for your business' financial health.
4. Talk to the Right People
Make sure you’re sending the invoice to the person who actually pays the bills. Remember, this may not be your customer contact.
This is a critical because it affects both cash flow and the time it takes to collect on late payments.
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5. Leverage Payment Automation
Automate payments wherever possible. Moving to a recurring, subscription, or automated payment model will save you time better spent on other aspects of your business. It will reduce administration costs and help customers who frequently forget to pay.
An automated billing service like Fusebill ensures you receive payments on time, significantly reduces passive churn, automatically implements dunning management rules, and notifies you of missed payments.
By offering a convenient payment solution that is completely set up by you, you can ensure that your business receives the payments on time. Not only that but it notifies you and your customer(s) if the payment has failed, so that alternative arrangements can be made.