Is the constant struggle with late payments stressing you out? You’re not alone. Many businesses face this challenge, but fear not.

At Figured Out Finance, we’ve got your back. These five easy-to-implement strategies will help you improve your cash flow by collecting payments faster:

1. Crystal-Clear Due Dates:

Don’t just say “net 30 days.” Include the exact date your payment is due on every invoice. For example, if your invoice date is October 25th, 2024, mark the due date prominently as November 24th, 2024.

Pro Tip: Sending invoices at the end of the month (around the 30th or 31st) can help avoid late payments due to companies’ internal payment cycles.

2. Detailed Invoices Get Paid Faster:

The more information you provide, the quicker your invoice gets approved. Here’s what to include:

Your client’s purchase order number: Makes it easier for them to match the invoice to their records.
Contact details: Include the name of the person who placed the order or requested your services.
Itemized breakdown: For product invoices, list product numbers, quantities, and individual prices. For service invoices, include hours worked and hourly rates.

3. Offer Multiple Payment Options:

While bank transfers are common, giving your clients choices can speed things up. Consider offering:

• BPAY
• Debit/Credit cards (consider fees associated)
• Cash or cheque (for traditional businesses)

4. Late Payment Policy:

Having a clear late payment policy discourages delays. Here’s what to do:

Establish the policy upfront: Let new clients know your expectations during onboarding.
Include it on invoices: Briefly mention your late payment policy on invoices and statements.
Focus on consequences, not penalties: Instead of charging interest (which can be hard to enforce), consider:
Suspending credit: Stop offering credit to clients with outstanding invoices.
Credit reporting: Inform clients you may report overdue invoices to credit bureaus.

5. Factoring for Immediate Payment:

For stubborn overdue invoices, factoring can be a solution. A factor is a company that buys your outstanding invoices at a discount. You get immediate cash, and the factor collects from your client. This can be a good option if cash flow is critical.

Bonus Tip:

Explore additional financing options through a broker. They can help you access solutions like commercial loans or equipment leasing to keep your business running smoothly.

By following these Figured-Out Finance tips, you can ensure a smoother cash flow and take control of your finances all year-round.