When you are a small or medium business, a few customers not paying for their products and services could be very detrimental. Unlike larger companies who can afford the occasional delinquency, every penny counts, especially at a time when many SMBs are struggling to stay afloat. And with the economy still trying to improve, chances are your customers aren’t paying or are requesting extensions on payment deadlines.
As a matter of fact, according to the American Express OPEN Small Business Monitor, at least 60% of business owners are currently experiencing cash-flow issues and about 26% are worried about customers paying bills on time. There are ways to handle this that involve collection agencies and attorneys but those can be costly and just as much a hassle for you as they are the customer. Before you hire a third party or seek legal action, there are a few other things you can do.
First of all, you should probably start checking a customer’s payment history. So many businesses do this these days and for good reason. For a reasonable price (as little as $3.00), you can get some credit and payment history information on a customer before you agree to do business with them. Even if you don’t want to check the credit history, ask around. See if your customer has dealt with other people in your industry and find out what their experience was like. This method allows you to weed out anyone you might see as a high-risk and gives you more information about just who you are dealing with.
Another way to ensure prompt customer payment is to make it easy for the customer to pay. Offer variety and let the customer choose what payment method he or she is most comfortable with. Maybe you offer Paypal but you don’t Google Checkout. Consider signing up for that, too. Bill Me Later is another great option that customers can use. And whatever outlets you decide on, make sure a customer can pay via credit card, checking account, or any other method they may need to use. Also, don’t forget to make your payment options clear. Feature them on the homepage of your website or talk to your customers about them up front.
One last idea you can use to prompt your customers to pay on time is using mobile devices. Equipping whomever will be accepting your payments with a cell phone or Bluetooth device that will swipe credit cards is a convenient idea for customers who aren’t always carrying cash with them.