Many field service businesses have to deal with some customers who delay their payments. The COVID-19 induced economic downturn has also increased the risk of late payments, leading to major cash-flow issues, which can bring down even the most efficient and busiest of enterprises. Atradius, a leading provider of trade credit insurance reports that in the US, 39% of invoices are paid late (more than 90 days due) because of which 51.9% of businesses lose the value of their B2B receivables. These accounts receivable facts prove that a large number of companies struggle to get their invoices converted to cash on time. It’s important for SMBs to push their customers to pay their bills on time.
In this post, we’re discussing the top 5 strategies you can implement to encourage your customers to pay their invoices on time.
A payment gets naturally delayed if there is a delay in raising the invoice. On top of this, any errors in the invoice will further delay the payment. The customer and the support agent have to go back and forth many times to resolve the ambiguity. By the time you clear the accounts receivable, a lot of days or weeks would have elapsed.
This is where an integrated field service management software preempts such issues. An FSM suite does the following:
A field service software allows you to keep the invoice format plain and simple. You can explain all heads and include dates of services done. This leaves no room for ambiguity. An FSM also pre-empts the customer from having to make a follow-up call to get clarity on the invoice.
Read more: Creating simple and quick invoices with ReachOut
Businesses that work without a contract run a huge risk. A contract obliges the customer to make the payment on time. It’s important to include the invoice payment clauses within the contract.
Prepare a comprehensive standard-form contract and include it as part of every work order confirmation.
The best way to receive prompt payment is to collect the money in advance. Specify the amount and terms of the deposit in the contract.
Often, the decision on deposits and part-payments depends on upfront negotiations.
Despite the best of efforts, some customers delay payments, for varied reasons.
A field service management suite makes it easy to keep track of unpaid invoices. It automates reminders to the customer as well as the collection agent.
Reach out to customers with an outstanding invoice. Train customer service agents to seek payments in a firm, yet polite way. Offer gentle reminders at first. It could very well be that the customer forgot about the commitment. Unnecessary persistence may unwantedly sour relationships. Maintaining a good rapport with the customer increases the chance of prompt payment.
But often, agents will have to persist and follow-up daily to get the payment.
When follow-ups fail, or the customer stops replying to reminders, the best recourse is to hand over the debt to a collection agency. Collection agents use their experience and professional expertise to collect debts/ overdue. They are often successful where the creditor fails. The fee depends on the amount and the duration of the default. Many jurisdictions have regulations on employing collection agents. Check the local provisions and always remain on the right side of the law.
Reserve legal action as the last resort, considering the delays and the costs involved.
The best way to get paid quickly is to have an efficient software that can verify details and generate invoices automatically, send the bills to your customers immediately after completing the service, issue reminders, capture payment details, issue receipts, and track your accounts receivable end-to-end. Advanced field service software like ReachOut allows you to create custom invoices quickly and affordably, increase your cash flow, and eliminate the need for chasing down late payments.
Read more: How ReachOut helps sync your invoices with QuickBooks?
Interested in automated online invoicing? Get in touch with us to learn more about the benefits of ReachOut’s invoicing feature.