Getting paid on time for services is key to running a healthy business. If your accounts receivable is running into issues month after month, you need to revamp your collections process.
Here are seven tips that will help you get paid faster
1. offer convenient payment options
You want to make payment as easy as possible for your customers. You want to be able to accept credit cards, offer an online payment option and accept mobile payment. When new customers come on, be sure to get their email address so you can follow up with an email asking them to set up their account with a credit card or auto pay. Consider offering an incentive for them signing up.
2. try and get customers to prepay
If you can offer a small incentive for people to prepay for your services, do it. Perhaps a percentage off if they sign up for a payment plan for 6 months or a year of service. Prepaid billing can offer you a line of credit you can tap into if needed. Just think how nice it would be to not have to worry about chasing people down for money.
3. Send out bills early
If you have clients that are in a contract, bill at least 2 weeks in advance or even a month ahead of their schedule. You don’t want to wait until services have been performed to send out a bill.
4. Use the right landscaping business software
In order to run your landscaping business effectively, you need to be using the right software package. You want something that is going to help you stay on top of invoicing and collections as well as help you run all the other aspects of your business.
5. Offer an incentive to the person doing billing
Typically, you have one person handling billing and collections at most landscape companies. Think about incentivizing your billing admin to collect money by a certain deadline. This could be a deadline like 30 days or 60 days and if they achieve this, they get a bonus. Think of it this way, if you had an outside company doing collections for you, you would be paying them a percentage. Why not reward your billing person instead.
6. Leave an invoice behind
After each visit, leave an invoice behind. You will typically get paid much faster and lets the owner know you were there that day. They see the invoice along with their freshly cut lawn and they are prompted to write that check. You will find that you get paid quickly and well before your next visit.
7. Consider Factoring
Factoring or “accounts receivable financing” means you sell your receivables to a third-party financial company. They will take care of collecting the money and then pay the money out to you minus their fee. This can be a helpful solution for any cash-flow problems.
8. Use a collection agency
When all else fails, enlist a collection agency. They will usually take up to 50 percent of the invoice, but at least you’ll get paid something.
Mention the word collections to a customer and you will no doubt get paid pretty quickly. But who wants to be doing this all the time in order to get paid for services rendered. The above tips will help you put together a payment process that will keep you from chasing after clients for payment. Accounts receivable down and profits up.