How you can fix problems with your unpaid invoices
If you are getting fed up with your customers that do not pay on time, take the first step forward to implement a new accounts receivables program that will be able to help you acquire the funds you need quickly. When your customers are slow to pay, it forces you to eat into your cash reserves to pay for raw goods and salaries. You shouldn't need to use raw goods to stay alive while you have a large amount of money just sitting in your accounts receivables.
One of the first things you need to do when you are working on developing a stronger invoicing program is to get the invoices out as soon as possible. Do not wait a week after the order has been delivered to send out the invoice, place it in the box with the order and then add another one in the mail. You need to make your invoicing process fast, it's the only way that you will get the attention of your customers and to start getting money in a timely manner.
The days of writing an I.O.U. are over. You need to get into the 20th century and start using digital programs that allow you to make professional invoices. QuickBooks is commonly used by just about every business as its one of the most affordable programs on the market and it makes professional invoices that are easy to track. QuickBooks is so user friendly that it even generates the invoices for you and will print a nice big "LATE" notice at the top of you have customers that have already gone past their expired window payment date.
Do a credit check
If you are extending credit, always run the credit report of the customer. You never know who will pay and who won't. By doing a credit check you can cut out a little bit of that late payment problem as you are weeding out the people that commonly default on their invoices and credit card payments.
Ask for a Payment
Before you let the customer walk out of the door with their purchase, require that they put something down on the order. Most companies are asking for at least half of the total invoice amount up front and then requiring the customers to enroll in an automatic deduction plan until the invoice has been paid in full. You need to watch out for the customers that like to continue adding more and more to their bill by asking them to pay off their balance before they can purchase additional items.
A great way to get people to pay is to reward them for paying their bills on time. People love to get free products or at least discounts off future orders. By offering some type of incentive, you will be able to see more people work hard to pay off their invoices as they want to acquire a credit or a free product. Incentives don't even need to be anything major, just a little something that will spark their attention and will get them to jump.
While you don't want to act like a collector, some of those late payers will thrust you into that role. You need to call your customers that are not making their payments and find out what is going on. Call them up and ask for an immediate payment, even if it is $10 at least that is something. Then you can tell them another date when you will call back and how much time they have to work with you before you do decide to pass along their account to a collection company that will not be as kind and generous as you are about waiving penalties and fees.