As a business owner, it’s frustrating when you don’t get paid on time.
It can be stressful waiting for your money to show up.
Unfortunately, many invoices are paid late. This can negatively impact the cashflow of your business and your ability to operate how you want to.
So, what can you do about it?
The first step is to nail your credit control. Part of that is offering your customers convenient ways to pay for your products or services.
We’re going to explain precisely how you can do that now. Check it out:
How To Improve Your Credit Control With Payment Methods
What is Credit Control?
Credit control is a vital part of running a successful business. It’s the process of ensuring you get paid for the products or services you have sold. Ideally, you should have a short wait time between supplying your clients and getting the money they owe you into your account.
It’s called credit control, as your clients or customers “owe” you until the bill is paid. So, you are effectively extending a line of credit to them. But, you are doing it in a controlled way as there is a fixed amount owed and a specified timeframe for payment.
Solid credit control is about creating good cashflow for your business while still offering workable terms for your customers and clients.
The Importance Of Good Credit Control
It is essential to have credit control procedures set up in your business so that you are doing everything you can to get paid on time.
The basics are to set up payment terms and to advise your customers and clients of your payment expectations. These should be agreed on upfront before any work begins. You also want to make sure the invoices contain all the necessary information and are being sent to the correct place so that the right person within the business receives them.
Send your invoices as soon as a deposit is required, a milestone has been hit, or the job has been completed. The longer you wait to send them, the more delayed your payment will be. Don’t be afraid to chase overdue amounts, either with automatic Xero reminders, a timely email or a phone call.
Making It Easy For People To Pay You
The crucial part of good credit control is making it easy for people to pay you. The best way to do this is to offer a number of different payment methods.
Here are some of the most popular payment methods that can help you to get paid on time:
1. Bank transfer
One of the most common methods of payment is via bank transfer. To make this method as efficient as possible, ensure that your bank account number appears on the bottom of your invoice along with a payment due date and the reference you’d like them to include so that you can match the payment to the invoice in your accounting software.
2. Recurring payments
When you have regular recurring payments, you can set them up as a repeating invoice in Xero and have them send automatically to your customers on a specified date or timeline. They can then make payment of these invoices by usual payment methods.
Or, you can simplify that whole process by using a payment service like GoCardless. GoCardless is a bank-to-bank direct transfer payment service that is designed to help you deal with recurring payments easily and efficiently.
It operates like a direct debit, automatically collecting payments from your customer’s bank account. Customers enter their payment details once, agree to the terms and then they can make payments for your products or services without any further action. You can use it to charge fixed or flexible amounts, and it can be integrated to Xero to make invoicing and payments frictionless.
3. Pay now (credit card)
Giving people the option to pay as soon as your invoice hits their inbox is an excellent way of getting your funds in quickly. You can do that by giving them the option to pay via credit card.
You can do this in a number of ways:
- Connect Pay Now services to Xero or MYOB
- Send invoices directly to your customers from PayPal or Stripe
- Use online payment options like Google Pay and Apple Pay
4. Cash
An oldie but a goodie. You can still accept cash in hand as a payment method. Just make sure you deposit the funds into your business account to match the amounts against the invoices issued.
Get Expert Help
Want to improve your credit control and make your payment process as seamless as possible? We want that for you too!
This is why our team of bookkeepers and finance whizzes are on hand to help you streamline your payment methods. Not sure what is best for your business or don’t have the time to set up the technical stuff? Then, have a chat to our team about it today.
We can advise you on the best payment methods for your business, and then we can get them set up and implemented for you. Alongside this, we can assist with implementing a streamlined credit control plan suited to your needs.
Get in touch with the Admin Army team today and take your first step towards better credit control.