If you have been in business as long as I have (since 2001), you’ve had customers who are slow payers and no payers. But, in reality most customers do really want to pay you on time, some just need a little help being more timely than others.
I have found as my business has grown that my tolerance for slow payers has rapidly diminished. Slow payers directly affect my own pay check, as a small business owner. So, what do you do to help slow payers be on-time payers? For me, I changed several of my billing procedures. This is what I have done:
- Added online credit card payments both with Sage Payments (integrated with my accounting software) and PayPal.
- Instituted a policy that self credit card payers had to pay for services earlier than automatic credit card payers (where we process the card for them).
- Added in our contract we don’t provide services until we have payment in advance.
- Really policed my payment dates. Stopped services if we did not get payment in our contracted due dates.
- Sent gentle reminders before the payment deadline to all self paying clients.
- Gave more payment options.
In fact on number 6, I am getting ready to do just that with Pay Pal’s new enhanced recurring payment options. You can read more about this service we are now enacting in this link in the previous sentence. This new program allows you to give your client’s more flexibility in how they can pay. You can schedule monthly payments at different amounts, create monthly repeating subscription-type payments, and even installment payments. You and the client can also decide a monthly spend up to amount so you can bill automatically variable amounts each month.
For me, getting customers to pay on time is still about giving them options. However, chasing around your payments does take time and adds to your overhead. For my business, I am also instituting a new program – if you don’t pay on time two months in a row, you will now have to choose one of Pay Pal’s enhanced recurring payment programs or we will simply consider that we are not a good business match for you.
Slow payers and no- payers can really affect your bottom line and create an atmosphere where you are forced to raise your fees to all customers, as your overhead increases to cover the time you spend to collect payments from slow payers. So, help customers to help themselves (by keeping your own prices low) by offering more payment options.
P.S. PayPal did not pay me to write this post, I am signed up and will be using their new payment program and thought it was excellent for my own business use and wanted to share the details with you as well.