After providing great services, it's really frustrating not to get paid on time, isn't it?
We get how this can mess with your cash flow. Late payments can slow down your money coming in, making it tough to run your bookkeeping business smoothly every day. And guess what? It doesn't just stop there – it can also make things awkward with your important vendors. Not a great spot to be in, right? And if the numbers are to be believed, 54% of small and medium-sized enterprises (SMEs) experience delays in payments, with an average delay of 6 days.
So, in this blog, we're sharing six easy strategies to make sure your vendors pay you on time, every time. These simple steps aim to help you avoid the hassle and keep your business running smoothly without any payment hiccups.
6 strategies for timely vendor payments
In the face of this potential chaos, small business owners need a proactive approach and practical strategies to ensure they get paid on time.
Negotiating favorable payment terms
When working with vendors, talk openly to agree on fair payment terms that work well for both sides, ensuring payments are made on time without causing stress. Put these terms in writing, detailing deadlines and fees, so everyone is on the same page. This written agreement acts as a reference, making sure both your business and the vendors understand the payment expectations. Include these terms on invoices with clear phrases like "due upon receipt" or "net 30" for transparency, making the payment process smoother and maintaining a positive relationship with vendors.
Implementing a robust invoicing system
To improve your invoicing, make clear and simple bills that explain what you provided and when payment is due. Consider using automated invoicing software, which helps with tasks like creating templates and sending payment reminders. This technology saves time, reduces errors, and makes the payment process smoother. By making these improvements, your business can stay organized, look professional, and create better relationships with clients during invoicing and payments.
Make payments easier with instant payments
Look into instant payment solutions that fit your business needs, making transactions faster for both you and your vendors. The right instant payments solution speeds up the payment process and makes your accounts payable process more streamlined and responsive. Some modern payment solutions can even get payments done in just 22 seconds and that too 365 days of the year, charging a minimal fee of 1% (minimum $1 and maximum $10).
Unlike traditional methods like checks, ACH or credit cards that make you wait for 3 to 10 business days; instant payments give you results right away. With the launch of the FedNow Service, more institutions and businesses are choosing instant payments. Experts believe that in the long term, instant payments will see increased use and demand from financial institutions, corporate clients, and consumers. Adopting these quick payment solutions not only simplifies your financial tasks but also keeps your business ahead in efficiency and innovation.
Incorporating automated payments
Automated payments mean using technology to minimize mistakes and make sure payments happen on time. This method simplifies the entire payment process, reducing the need for manual work and lowering the chance of delays.
With automated payments, systems are set up to execute payments automatically based on schedules, removing the need for constant manual monitoring or reminders. This not only boosts efficiency but also creates a more dependable payment system, benefiting both your business and vendors.
Open and transparent communication with vendors
It's crucial to communicate clearly with vendors and develop strong vendor relationship management skills. Are they well-informed about payment schedules? Address any potential issues upfront to build trust and strengthen the relationship. When dealing with clients, focus on effective communication with new ones, understanding each other's perspectives for a healthy partnership. If payment issues arise, a strong client relationship helps work through challenges without harming the overall connection. Positive client relationships not only solve current problems but also prevent issues from arising in the first place.
Discount policy for early payments
Encourage vendors to pay early by introducing a discount policy. For instance, you can offer a 2% discount on the total invoice amount if vendors make payments within 15 days instead of the usual 30. This not only benefits your company by improving cash flow but also creates a positive relationship with vendors, showing appreciation for their timely payments. It's a win-win that motivates prompt and collaborative business payments.
Say hello to getting paid on time
The importance of receiving payments on time from vendors cannot be overstated for maintaining a well-functioning business. Late payments can lead to disruptions in cash flow and strain relationships with key partners.
And if you've already decided to transition to a modern payment solution, Forwardly stands out as the ideal choice for your business. With its features for instant and automated payments, Forwardly ensures a seamless and efficient payment process, contributing to the overall smooth operation of your business. It's time to start receiving timely payments for your services and pave the way for a more successful future.