There is a myth that service-based businesses do not experience the same pains of inconsistent cash flow that project-based business often experience.
In the perfect world, customers would pay you every single month and never be late. After all, you’re providing fantastic service, right? It shouldn’t be unreasonable to expect your customers to pay their bill on time. You even have clients who understand they will be billed every month on a recurring basis, should be guaranteed money in the bank.
The sad reality is many serviced-based businesses are handing out their services every month for free. Essentially loaning their clients thousands of dollars in money and becoming their bank in addition to their services.
Now sure, the customer is responsible for paying their bill, but have you ever thought of how many barriers your business may have accidentally put between you and your customers when it comes time to pay you?
Making it hard or inconvenient for your customers to pay you is going to lead to more customers missing payments when you send them an invoice. All those skipped payments begin to add up, and soon your company’s accounts receivable has skyrocketed past sixty days.
There is hope, even if you’re A/R is over a hundred days, you can turn those outstanding dollars into money in your bank account if you follow these steps.
#1 Give your clients transparency
One of the easiest ways to eliminate late payments is to get every customer on an autopay agreement. That way you’re not waiting for customers to pay you, and your monthly cash flow is consistent and predictable.
Getting all your customers to agree to automatic billing is not always easy. One of the biggest reasons a customer would turn down the ease of enabling autopay on their account is due to fear.
Signing for a business to charge you every month can make some customers anxious and takes trust. A customer doesn’t like the thought of losing control of their account and creating a situation for your business to abuse them by overbilling their account.
How do you overcome this fear? It’s pretty easy to accomplish. All you have to do is give them the power to see their account at any time and see every single invoice they have to pay and have paid in the past. In other words, total transparency with their business account.
When you use a tool like ConnectBooster, you can give absolute transparency to a customer into what you are changing, what account that money comes out from, and even seeing future payments.
Not only does it give them peace of mind by being able their account at any time, but it also makes it easier for customers to resolve any billing questions they may have on their own time. They don’t have to wait to call you when your business is open, and it gives your business extra time not tied up on the phone answering billing questions.
#2 Stop bothering them for payment information
Imagine your client saying “Hey, just put any invoice under X amount on my card.” That is a dream come true!
But how are you going to accomplish that while keeping their data safe? Are you going to hold a voided check in a file cabinet to run an ACH against their account? Are you going to have a Rolodex of credit card numbers?
None of those are safe options, and now you’re at risk of losing that information and experiencing a data breach. If you don’t have a safe way to store every customer’s payment information you’re going to have to call your customer every single month and ask for a card number.
Imagine every single month, Amazon or Netflix had to call you and ask for your credit card number to charge you. It’d be super inconvenient for you and them. Now put yourself in the shoes of the poor accountant whose job it is to call every customer to ask for their payment information every single month.
Now sure, Amazon and Netflix are massive corporations that customers payment information in a PCI Compliant payment vault, but you don’t have to be a big as Amazon to take advantage of using a PCI Compliant payment vault exactly like theirs.
You want to make it as easy as possible for your clients to pay for money, and that involves using a tool like ConnectBooster. You get a client’s permission for monthly withdrawals for an amount from their preferred account every month and don’t have to bug them.
It may sound impossible for your business to offer that kind of convenience to your customers when you’re under a hundred employees, but you can. What’s even better, you can use ConnectBooster whether you have five, fifty, or five thousand clients.
Make it easy for your clients to pay you
Although cash flow is critical for a business to survive, it’s usually one of the lowest priorities on anyone’s radar. Without a healthy cash flow of money coming in you’re going to have all your money tied up in your accounts receivable every month, and that’s not good for growth.
One of the easiest ways to increase your cash flow is to make it as easy for your clients to pay their bill with you as it would be with a company like Amazon.
You don’t have to be a large organization to take payments 24/7/365 and hold every customer’s payment information safely.
Interested in reducing your A/R and giving your customers total transparency into their bills? Feel free to reach out and see what your company’s cash flow can look like in the next quarter.