You’ve sent out invoice after invoice and the bills are starting to pile up. Does this sound familiar?
Many B2B businesses, like yours, experience this dilemma every single day. Delayed payment from late paying customers is not only a major nuisance, but can also kill your cash flow.
3 Ways To Better Manage Late Paying Clients Using Invoice Factoring
Without steady cash flow, your business’s daily operations can suffer tremendously. Having to chase late payments is something that your business will most likely not have the time, energy or adequate funding for. To help you avoid the common stresses of late paying clients, we have compiled some of the best and most effective ways to get paid faster.
1. Analyze Your Invoicing Procedure and Make Preventative Changes
Having a fluid, consistent, and well-managed invoicing system is key for on-time payments from your clients.
Take a good look at your current invoicing system to spot any flaws in it.
- Are the terms of your invoice spelled out clearly and correctly?
- Do you offer multiple payment options for your clients to make payments the easiest way for their needs?
- Does your customer have good past financial history?
- Did they get their invoice promptly after your service was completed?
If you’ve answered no to any of these questions, your invoicing system needs a serious revamp. It is imperative that you look at your invoicing system through the eyes of your customer—not as a business owner.
Your customers want to be able to clearly understand what is needed from them right from the start. Audit your invoicing system to ensure that dates, amounts, and any other necessary payment information is spelled out in the most efficient way possible. This is the easiest way to prevent late payments moving forward.
2. Send Out Late Payment Reminders
In some cases, your clients haven’t paid their invoices because they simply forgot. Sending out late payment reminders will help put the pressure back on your clients to make the payment faster.
This is not a complex system to implement into your existing invoicing procedure. Late payment reminders can be anything, such as postcards, emails, phone calls, texts, or whatever works best for your business.
In your invoice or contract with your client, ask how they would like to be contacted. Keep their answer on file and have your administrative team contact your late paying clients in the manner that they prefer. They will be more likely to respond and make payments to your business.
3. Utilize Invoice Factoring
One of the easiest ways to avoid late paying clients completely is to utilize invoice factoring. With invoice factoring, your business will be able to work with an invoice factoring company to get an up to 96% cash advance with low rates in just 24 hours or less. This will let you bypass late paying clients completely. By using invoice factoring, you will get practically instant access to the funds owed to your business without having to wait to get them directly from your client.
The invoice factoring company will also take on the task of collecting from your clients, allowing you to free up time for your administrative team. By using invoice factoring, your business will be able to secure a strong source of capital and level out cash flow, making it easier than ever to grow.