Here’s a common problem that startup businesses sometimes don’t anticipate and are often unprepared to face: slow-pay or no-pay clients. Late or unpaid invoices are a fact of life for any business, big or small, that doesn’t collect full payment in advance.
If customers are getting slower and slower at paying, and your overdue notices and e-mails aren’t getting much action, it could become a big problem for your startup company cash flow.
But there’s much a small business can do to head off trouble at the pass, or to speed up payments.
The key is to create a clear cash collections process at your startup business. It starts by making smart credit-granting decisions. “But I don’t grant credit,” is a common protest from startup entrepreneurs. Yet anytime you deliver a product or service without first collecting payment you are, in fact, granting credit. If you are ever at risk of not being paid, you are - like it or not - a creditor.
Here are 8 ways for your startup business to improve cash collections:
- Become a better biller. The appearance of your invoice is a crucial first step toward speedier collections. The invoice should be clear and simple. It should state explicitly, in itemized fashion, what it is for. Fancy colors or cute designs detract from the purpose - getting paid.
- Look professional. Send a real invoice, not stationery with “amount due” typed in. Make it clear what business name the check should be made out to.
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