5 Ways to Get Paid Faster
Running your small business will come with it’s own challenges and one that most businesses suffer from is cash flow. "Cash is king" as the saying goes and without it, you are going to struggle to keep paying your business overheads such as your staff or rent. We look at 5 ways to help bring this cash into your business quicker and help your slow, painful customers become your best with quick payment.
Your Invoice Template
This is one commonly overlooked but is it clear on your invoice when the amount is due? What the invoice is for and does it have your bank details? You need to ensure that your invoice template has a clear structure and clearly shows your payment terms. The terms can vary from upon receipt (0 days), 14 days or even 30 days - it will depend on your industry and your customer but the lower you can keep this figure the better. Most businesses will wait until the very last day to pay you as they are managing their cash flow too!
Do you offer a variety of payment methods or are you only offering BACS and cash? The modern customer likes variety and having options like Paypal and Stripe can go a long way - all they have to do is just login with their email address and make the payment. Most banks require you to use two factor authentication before setting up a new customer, like Barclays with their PINSentry. How much easier is it for the customer to just log into Paypal rather than “do it later”? Exactly. For Xero users, our cloud bookkeeping software of choice, you can also hook these payment methods up to your invoices, so your customers can just click no the PDF invoice to be taken to Stripe, Paypal or GoCardless. It’s as easy as that.
Do you offer a recurring form of revenue, like a subscription or a membership plan where your customer will be paying the same amount, every month? GoCardless is tailored for those businesses. Rather than asking your customer to set up a Standing Order, save them the hassle and set up a Direct Debit between their bank and yours. They just need to fill in their bank details and you can then sort out the plan, the monthly amount and GoCardless will keep your customer updated. They take a very small fee of 1% or up to a maximum of £2 per Direct Debit and it means that you are in control of when your customers pay you. We use this ourselves as all of our clients are on monthly packages and it makes the sign up process much easier as well. You can also use GoCardless for one time payments, like mentioned in point 2.
Sometimes, a customer just needs reminding, and with some persistence, you can prompt early payment or at least receive your payment on time. You can set up invoice reminders to automatically be sent out via Xero or use software such as Satago or CHASER to do the job for you. All of our Limited Company clients receive a free Satago setup to get this up and running. The idea is that you set up 3-5 emails that will chase the customer for payment, but in a nice and personal way. It’s advised to chase a few days before the payment is due (as a reminder of the upcoming due date) and then set a sequence to follow anyone who doesn’t pay on time.
Maybe you just can’t get through to your customer or perhaps it’s taking too much time, even with all of the above, to chase the payments in and look, you need the money to run your business. This is where invoice finance comes in. Usually, this is a scary word and used by the bigger companies and is also known as factoring, which is famous for being messy, complicated and expensive. However, companies like Satago and MarketInvoice offer invoice financing for small businesses. The best bit is that you aren’t tied in to all of your invoices as you can pick which ones you want to invoice in advance. Typically, you’ll receive 70-85% of the invoice value with the majority up front and the rest upon Satago or MarketInvoice receiving the money themselves. This can help get you out of a tight spot or be an acceptable cost to keep your business on the front foot. Satago can finance your invoices from as little value as £500 - gone are the days where you need over £100k turnover or really big invoices to benefit.
Have you tried any of the above points? Is there a particular method that you have tried that has seen results for your business? Let us know in the comments below and if you’d like to chat about any of the solutions listed then please get in touch. Usually we can give you a free demo or a discount code to get you started!
About the author
Ben Nacca is an accountant but is nothing like the stereotype you have visualised in your mind! He has worked in the accounting industry for almost a decade and is CEO here at Cone.
Ben loves travelling the world, playing video games and playing his acoustic guitar whenever he finds the time between spending time with his two chihuahuas, Hugo and Pablo!