82% of businesses fail due to poor cash flow.
Most of these businesses are wholesale/suppliers who offer their goods on trade credit. Why do they fail?
You probably already knew this. You’re in the game yourself and face these problems on a regular basis. Late payments are a large problem for small to medium sized businesses in Australia, with the average invoice being paid 24.6 days late. This puts a lot of businesses in hot water.
Now, do your customers pay late just for the fun of it? Of course not. Sometimes it’s a simple matter of forgetfulness or a communication error. However, there are the customers that are genuinely struggling with your bill.
Don’t lose business
One thing for sure is that you don’t want to see your customer-base shrink.
If you let the late payment get to you and you lose your cool with your customer, they’ll pack their bags and move onto your competitor. You want to be understanding, yet find a solution to your payment problems.
Here is how to solve this and keep both parties happy.
Get them on a payment plan.
Offering your customers who are struggling to pay the lump sum with a payment plan is a win-win:
It’s easier for the customer to pay off smaller increments of debt
It gets money through the door for you
Getting some cash from your customer can be enough to keep your cash flow going strong while you continue to operate.
If they’re a repeat offender, however, you need to have a look at your trading terms. If you don’t already, include a prepayment requirement for buyers that pay late in your terms.
Payment plans with PencilPay
So how do you create an effective payment plan that ensures you get paid and is presented to your customer in a professional manner?
You can do this manually OR you can use PencilPay. The platform allows you to select the customer who’s struggling to pay, find the invoice they’re struggling with, and create a customised payment plan to suit their needs.
Here is a quick video demonstration on how it works.