The best way to protect your business is to make sure that every customer pays on time. This may seem obvious, but many small businesses still struggle with collecting payments from their clients. If you’re not using the right payment terms when negotiating with customers, it can be even more difficult to get paid what you’re owed. The good news is that there are simple steps you can take to avoid common payment mistakes and ensure your business gets paid as quickly as possible—in some cases, within 24 hours of an invoice being sent out!
Tips for Setting Better Payment Terms for Your Business
As a business owner, you want to set payment terms that are fair to your customer and to your business. If the customer is a small business and you’re dealing with them for the first time, ask about their credit history. If they have a good history of paying their bills on time and in full, then it might be okay to extend them longer payment terms than other customers who haven’t had such a good track record.
Think about the type of product or service you’re selling. If it’s something like construction services, where there will be delays, then offering shorter payment terms may make sense because there might not be any real harm done by waiting longer until everything is complete before asking for payment again!
Use Tools for Tracking and Managing Invoices
You can use tools like invoice tracking software or other resources to help you negotiate payment terms with customers.
One of the best things about using a tool like this is that it makes it easy for both parties involved in the transaction to see what’s been paid and what hasn’t, so there’s no confusion about how much money is owed at any given time.
Here are some examples of tools that might help:
Payment processing:
You can use a payment processing service to take payments online or at a point of sale. This is especially helpful if you’re using an invoice tracking tool, because it makes it easier for customers to pay what they owe without having to give out their credit card numbers or other personal information.
Invoicing software:
You can use an online invoice creator to send and manage invoices, track payments, and record customer data. Some even have features that make it easy for you to generate reports showing how much money has been collected from each customer over time.
Customer relationship management:
You can use a CRM tool to track contacts, create sales leads, and manage accounts. This type of software is especially helpful if you’re doing a lot of business over the phone or via email since it makes it easy to keep track of who you’ve spoken with and what they’re interested in buying.
Financial management:
You can track expense online to manage cash flow, keep track of invoices and payments, and generate reports on profit and loss. This can be especially helpful if you’re just starting out because it gives you a clear idea of how much money is coming in every month so that you can plan accordingly.
Reporting:
You can use a reporting tool to view data about your company’s performance over time. This is especially helpful if you’re using an invoice tracking system because it lets you see which invoices are being paid on time.
Common Mistakes to Avoid During Terms of Payment Negotiations
- Don’t be too rigid with your terms. It’s important to set clear expectations from the beginning.
- Don’t be too flexible with your terms. If you’re working with a new client or customer and don’t know how reliable they are yet.
- Know what’s reasonable for other freelancers/service providers like yourself so that when someone asks for something unreasonable like a 60-day payment plan, you’ll have an informed response ready instead of just saying “no” out of frustration or fear.
It’s important to remember that your relationship with a customer is a two-way street. The key takeaway from this post is that you should always keep an open mind when it comes time to discuss payment terms with customers.