Encouraging Your Customers to Pay On Time

Nothing can drive a business down faster than customers who don't pay their bills as agreed. When you sell to customers on credit you are making an agreement with them. You will provide them with goods or services in exchange for their payment within the terms you agree upon. Period.

What I'm seeing more and more of is businesses using their suppliers as banks. Taking 60-90 days or more to pay a bill is becoming more and more common. I've seen some business owners shrug their shoulders and just accept that nothing can be done about it. That's just the way it is.

Naturally, I disagree with that approach. The reason you grant credit is to increase sales. But, the sales you want more of are the sales that pay and don't drag your business kicking and screaming into the Cash Flow Swamp.

So, what's a business owner to do?

Late paying customers can create a serious threat to the survival of your business. Whether you're just starting out or you've been in business for awhile, it's a critical business function to develop a solid plan to get paid.

Here's an example of a solid plan:

You decide your business will not grant credit. You decide to be paid up front before you provide services or products. You get set up to accept credit cards or use Paypal (or both). You communicate in no uncertain terms (nicely but firmly) what your payment terms are. You explain that payment is due before (or at) the time of service or purchase and that you accept cash, checks, money orders, credit cards and Paypal. Period. Then, you stick to it with no exceptions. You make that a condition of doing business. Communicate it firmly and respectfully. Don't waffle or apologize. People who take advantage of others can sense weakness. So can people who always have a tale of hard luck and woe. It's human nature.

Remember, late paying or nonpaying customers are endangering the survival of your business. These are not the customers you want to do business with. You'll have nothing to show for your work but stress and poverty. If you want to do some of your work for people in tough situations, donate your time but do it with the understanding that the majority of your time has to be spent on work that pays.

If you're working on a big project, set the expectations before you start so that a condition of doing the project is incremental payments. A percent before you begin, a percent during the project at specified intervals, and the remainder due on completion. This gives you the option of stopping work if you're not getting paid.

As with all areas of business, the best Defense is a good Offense. Set the standard for how you'll be paid, communicate it, and stick to it.

Caroline Jordan is a small business mentor and consultant helping small business owners understand, diagnose, and improve cash flow in their businesses. For more information and resources to improve cash flow visit http://www.TheJordanResult.com/mastering.html.

In The News:


pen paper and inkwell


cat break through


Small Business Grants - Tips from the Pros

Every business starts with an idea or a dream. To... Read More

Collaborative Negotiating: A Win-Win Strategy

COLLABORATIVE NEGOTIATING:Collaborative negotiating is a win-win strategy that can focus... Read More

Look Like Sizzle, Be The Steak

You've heard marketing and advertising gurus quip, "Sell the sizzle,... Read More

A Business Tail: Veterinarian Foams at Mouth, Chases Tail, Learns New Tricks--Case Study

Many self employed professionals find themselves overwhelmed, frustrated, and confused... Read More

Create a Win Win for Your Small Business

Discover How Specialized Cost Containment Creates A New Win-Win Position... Read More

How To Choose A Franchise

You'd like to go into business for yourself, and believe... Read More

7 Habits of Highly Successful Small Business Owners

Do you spend every waking minute in your business? Do... Read More

Dealing With a Crooked on the Take Government Worker

Many government department heads are on the take. Oh they'll... Read More

Aircraft Washing Service Operations Manual

Anyone who is serious about washing aircraft as a full... Read More

Power Tools for Business

How do we keep track of our business deals?If you... Read More

How To Write A Business Plan

Writing a business plan is a fundamental step to ensuring... Read More

How to Become Successful in the Field of Financial Consultants

Financial Consultants are one of the fastest growing industries today.... Read More

Franchising Companies Relationship Strategies

Franchising Corporations need to maintain an iron fist when it... Read More

50 Ways to Save Money

There are countless ways to save your business money. Unfortunately,... Read More

Bad Regulators Cost Small Businesses

When a regulator finds a target to go after to... Read More

Expand Your Professional Organizer Business

Grow your Professional Organizer business by branching out into related... Read More

Why Small and Medium-Sized Businesses Should

As the owner or an employee of a small-to medium-sized... Read More

Top Ten Tips for Leveraging Conferences for Big SUCCESS!

As I am preparing for my attendance to the CoachVille's... Read More

Justice In Action

During the 1980 presidential campaign, candidate Ronald Reagan vowed, if... Read More

You Are Invited

Business card size works well for invitations to special events.What... Read More

The Key To Success - Choose The Right Partners

Do you promote yourself as offering prompt, reliable and quality... Read More

Sample; Territory Reduction Policy for a Franchise Company

I propose this thought on the subject of Franchisee territory... Read More

Pressure Washing Companies; Pricing Dock and Deck Cleaning

If you own a Pressure Washing Company and wish to... Read More

Getting City Contracts; Local Government Contracting

All cities have a purchasing office and/or a procurement officer.... Read More

Effective Customer Interviews Make Life Much Easier!

One of the critical success factors for service-related businesses is... Read More

Private Franchising is not Real a Real Franchise

One major issue not being addressed right now in the... Read More

Small Business - A Thing Worth Doing Is Worth Doing Badly

A thing worth doing is worth doing badly. Yes I... Read More

The 5 Habits of Highly Successful Small-Business Owners

Have you ever wondered what the difference is between a... Read More

Keeping your Business Alive

As long as you eat and breathe you will stay... Read More

Bringing Home the Bacon

In general, all of us know how to accomplish the... Read More

Doing Business With Friends: Five Tips for Preserving the Friendship... and Your Sanity!

My colleague, Jane, recently lamented to me an all too... Read More

Fire the CEO

If you are the boss and you think your job... Read More

Dynamics of Daylight Savings Time on Service Businesses in the United States

The Dynamics of Daylight Savings Time changes the way we... Read More