Be the first to get paid: How to ensure timely payments

In times of economic downturn, it’s crucial for your company to implement strategies that encourage clients to pay on time.

During economic downturns, the likelihood of delayed payments or clients struggling to make ends meet increases significantly. This can result in unexpected shortfalls, leaving your business with less cash than anticipated simply because payments are not arriving on time.

According to Forbes, in 2023 the average credit card debt per borrower was $6 360, approximately 10 percent higher than 2022. This indicates that many individuals and businesses continue to spend beyond their means.

To avoid payment difficulties, it’s important for your business to have good liquidity. The liquidity shows your business’ ability to pay upcoming bills and expenses. This includes fixed costs such as rent and employee salaries, as well as one-time purchases like new equipment or unforeseen expenses. Good liquidity acts as a safety net, ensuring that your business can meet its financial obligations.

To have good liquidity, it’s important that your clients pay on time.

Read also: The ultimate guide to liquidity and cash flow

How to ensure timely payments

1. Prompt invoicing

The most important step is to send out invoices immediately after delivering a product or service. Let your clients know in advance that you’re going to send invoices as soon as you’ve delivered the product or service. Clear communication helps set expectations and strengthens your relationship with your clients, which is vital regardless of financial circumstances.

If you wait several weeks to send invoices, you will also have to wait longer to get paid. That’s why you should make it a standard practice to issue invoices as soon as you’ve delivered the product or service.

2. Handling overdue payments

Even with good communication and prompt invoicing, some clients may take a while to pay. Maybe the simply forget or they simply don’t have the funds to pay. If you don’t get paid within the due date, you have several options:

• Send a reminder: Politely remind the client of the outstanding payment.
• Reissue the invoice: Send the invoice again. The client might simply have overlooked it.
• Debt collection: If necessary, consider sending the invoice to a debt collection agency.

Overcoming the discomfort of reminders and debt collection

It’s common to feel uneasy about sending payment reminders or escalating to debt collection. However, it’s essential to reframe this discomfort: Selling goods or services is a form of bartering – you provide value, and in return, the customer pays.

By sending a reminder or initiating debt collection, you’re simply honoring the agreed exchange. Remember, if you failed to deliver the agreed-upon service or product, your client would likely raise a complaint. Just as they hold you accountable, you have the right to hold them accountable and expect payment for your work.

Effective communication, prompt invoicing, and a proactive approach to overdue payments are key to maintaining a healthy cash flow and ensuring that you’re compensated for your services.

Create invoices for free

Running a business can be challenging, especially during economic downturns. At Conta, we understand the pressure of managing cash flow and ensuring timely payments. That’s why we’ve made our invoicing software completely free of charge. With Conta, sending invoices has never been easier or more efficient.

• Completely free: Create your FREE account today and start sending invoices at no cost.
• User-friendly: Our software streamlines the invoicing process, allowing you to create and send professional invoices in under 2 minutes. Simply enter customer details, product information, and pricing, and your invoice is ready to go.
• Trusted by many: Conta is trusted by over 60 000 businesses for efficient and hassle-free invoicing.
• Highly rated: Our software has 4.5 stars on Google, reflecting our commitment to quality and user satisfaction.