While a good business management course will equip you with what you need to take care of most aspects of running a franchise, one thing that's hard to legislate for is late-paying customers. It's also more common than you might think, particularly as the cost of living has risen sharply in recent times.
What Is The Importance Of Prompt Payment?
Cash flow is the lifeblood of any business - especially when talking about Small to Medium-sized Enterprises (SMEs). In fact, as many as 90% of Australian businesses fail due to cash flow issues, so it's not something that can be ignored. The good news is - as you'll find out by reading on - there are steps you can take to alleviate the problem.
How Do You Encourage Prompt Payments?
If you want the accounts payable column of your balance sheet to read PAID more often than not, it's necessary to approach your billing in a methodical way. So, come with us now as we look at what you can do to encourage payment earlier rather than later.
Get Your Invoices Sent ASAP:
Something you should get into the habit of is getting your invoices sent over for payment as soon as you've provided the service or product requested. It should also have your payment terms displayed clearly. As business administration courses show, you have a number of options in this regard, as you can choose to set your terms as:
- Payment is due on receipt (immediate payment required)
- 7, 10, 15 or 30-day terms
- Cash on delivery
By displaying this information prominently on your invoices, there will be no ambiguity about what you're expecting. Then, it will be easier to broach the subject when those terms aren't met.
Keep Your Messages Polite & Respectful:
When you're up against it financially, late-paying customers can cause you great stress; however, what you should absolutely avoid is getting angry. As such, the language you use needs to be polite and respectful, both in your follow-up emails and on the invoices themselves.
Statements like 'Your timely payment would be appreciated' or 'We draw your attention to this possible oversight' are much more likely to result in action being taken. Getting upset and being unpleasant, conversely, often results in disputes and broken relationships. Don't lose your temper, as it solves nothing in business.
Automate Your Invoices:
As a franchisee, you'll already know that you have a lot of responsibilities - which often doesn't leave much time for getting your invoices created and sent. This can lead to invoices getting forgotten or not being chased up quickly enough. However, if you have regular clients, the way to go is to automate your invoices using one of the many programs available on the internet.
They include:
- MYOB
- Quickbooks
- Okke
These platforms won't cost you too much of your budget, and they ensure that your invoices never get forgotten. They also make sure that reminder invoices are triggered when certain points are met (e.g. 7 days late, 14 days late etc), and so everything is kept in hand. This kind of software even reminds you to pay your own bills!
Creating The Conditions That Encourage Early Payment:
These are just three easily-implementable measures you can take to encourage your customers to pay on time. Much of what's needed involves simply leaving no doubt in the customer's mind about when payment is required. Of course, this won't stop all late payers, but it will help.
Sure, there will be non-payers, and there's a route for that too, but having a structure to your invoicing process will ensure that most of your clients stump up the cash when they're asked to.
Boost Your Management Skills With OCA Online Learning
Running a franchise, or a small business takes a lot of nouse and hard work, but it can be made a lot easier with OCA online learning. CPD-Endorsed video-based and modular, courses like those found in our excellent value Franchise Support Skills Bundle offer an immersive and convenient way to boost your management skills - even when you're time-poor.
We regularly get told by our students that we offer the best online courses Australia has available, and that's only happened due to the hard work that goes into creating them. Developed in collaboration with top experts in their field, our courses are well-supported with 1-to-1 mentoring and tutorial assistance. For a closer look, check out our Student Study Demo.
To see our full course library that spans more than 20 different industries, visit us today at www.onlinecoursesaustralia.edu.au where you'll also see flexible payment options that allow you to spread the cost out more manageably. Alternatively, to get in touch with a friendly OCA advisor, call 1300 611 404 or email [email protected].
