It's a headache every business owner suffers: customers don't always pay on time.
That money is important to your business. You depend on timely receivables to pay your employees, stock the shelves, and keep the lights on. You likely need that money to pay yourself, too.
So it can be incredibly frustrating -- agonizing, really -- to wait and wait on a customer payment when so much is riding on that cash.
Try these simple tips to get your money quickly:
Call accounts payable and be nice. Unlike Sully's feisty grandmother/bookkeeper in the above cartoon strip, it's best to avoid calling your customer rude names. But she had the right idea: pick up the phone and try to get a response from the person responsible for paying your overdue invoice. It doesn't hurt to invoke a little sympathy, so feel free to explain how your business is a small organization without much cash and can't afford payment delays. Try to get a firm payment date or at least a status update as to when the money will come.
Call the customer. Chances are the person who placed the order with your business is quite removed from the accounts payable department. Ask your customer politely to see what they can do to prod payment. The accounting department will likely jump higher for an executive or someone within the company making the request more than they will jump for a vendor.
Talk to your bank. Most financial institutions will work with you to bridge a cash-flow gap caused by an overdue customer invoice. Explain the situation to your banker, disclose the amount of the expected invoice, and ask what he or she can do. If your business credit is good, some banks will advance you the funds (for a fee and some interest) and simply withdraw the advance from your account when the payment arrives. If you are desperate for the money, it may be worth it to pay a small amount for this factoring service.
Be diligent. Stay on top of invoices that are 60, 90 or more days overdue. It could indicate financial trouble within your customer organization. Like a sales call, it may take you several attempts to get a response from someone who can issue your payment. Make it clear on any voice message you leave that you will be calling again tomorrow.
It's no fun chasing overdue accounts but it's a fact of small business life. Nothing runs smoothly! You can better accommodate a few late-payers by designing generous receivables timelines into your cash flow forecast so that you aren't sweating late payments -- as much.
Need a small business laugh? Enjoy more Sully's Startup here. Attract business owners to your blog, website, or newsletter with our slice-of-small-business-life comic strip.
Roger Pierce is one of Canada’s top small business experts. He’s the founder of 12 businesses, co-author of the book Thriving Solo, and a writer for leading business publications such as Star Business Club, PROFIT online, YouInc and CBC’s Dragons’ Den website. Articles, blogs and videos produced by Pierce Content Marketing are used by national brands to win small business customers. LinkedIn