Late payments impact B2B business owners significantly because they need revenue to keep their business running and employees paid on time. Late payments make cash flow management nearly impossible if you’re a small business owner or startup.
Many business owners across the U.S. are currently struggling with late payments, with 41% of transportation and logistics firms stating that AP automation is their top priority, according to data from PYMNTS. Additionally, 75% of transportation businesses struggle to get invoices approved for payment, and 55% state that innovating AP platforms is an important goal. If your business is struggling with late payments, follow these tips to help avoid them.
Send customers regular payment reminders
Although customers may be aware that a payment is due, it’s common that they’ll forget to pay it on time due to factors like budget constraints and competing priorities. To avoid late payments, it’s recommended to configure your payments software to send customers email reminders two days before the payment’s due, on the due date, and the day after the due date if they failed to make the payment.
These emails must be completely automated to ensure you aren’t spending excess time and money on them. Customized drip campaigns allow you to create conditional automated emails that respond to customer behavior, making the email feel highly personalized and relevant.
Create incentives for early payments
Since you charge interest for late payments, why not incentivize customers to make early payments? Provide a small discount for payments made within a set number of days before their deadline. Be sure the details of the discount are written in the terms and conditions section of your client agreement so the rules and exceptions are apparent.
Upgrade your payment portal
If it’s difficult for customers to pay and they must rely on traditional payment methods like checks, they will likely be confused and delayed. The best thing you can do is make payments available through an online payment portal. This way, customers can quickly pay on the go or from their mobile devices. Be sure to research a payment portal solution in-depth before committing because credit card payment processing fees may be associated with this method.
If you need more expert advice on avoiding late payments, contact me by visiting my website or calling 617-843-5700. At Richmond Financial Services, I help my clients drive down payment processing costs and enjoy perpetual savings.
