How to Ask for Payment and Improve Cash Flow

Jan Reeves - Ask for Payment and Improve Cash Flow

Why do so many small business owners go out of their way to provide services or products to customers and then feel too embarrassed to ask for payment?

Why Do We Resist Asking for Payment?

Even when payments are terribly late, some business owners will still resist asking their customers to pay. Their hesitation is generally because they don’t know exactly what to say. They fear they might say the wrong thing when they ask for payment and upset their customers.

Which is rather strange really. If you think about it in another way, would a small business owner hand out a large amount of cash to a complete stranger and then not ask for it back?

Most likely, the answer would be ‘no of course not’.

If you consider this statistic from global debt recovery giant Dun and Bradstreet (now Illion) …

…Only 50% of Companies Pay on Time…

…then at some point, so they can continue to meet their financial responsibilities, suppliers will have to ask customers to pay.

Unpaid Invoices are Often a Source of Stress

Unpaid invoices are often one of the biggest sources of stress for a small business owner. Most likely, the future operation of the business is completely reliant on receiving payment of invoices on time from customers. But the thought of making a call to ask for payment is also a big source of stress.

Stress and Damaging Relationships

The thought of customers making excuses that you might not know how to respond to can lead to frustration. Understandably, that might make you think twice about making that call. You be may be concerned you might lose your temper. Losing your temper could cause irreparable damage to your business relationship.

Staying Ahead of the Competition

In a competitive environment, a small business owner may choose not to make a collection call if they feel they might offend their client. That might lead to the client buying from another supplier altogether.

Sometimes suppliers think that it is better to have a client that pays invoices late than to have no client at all (it isn’t!).

The Good News

The good news is that there’s a simple way to manage your order -> cash process to ensure your invoice is paid by the due date. As well as being simple, it just feels like customer service to both you and your customer.

This is the strategy I used to get paid on time in my own small business.

Our part-time administrator followed the process. Our customers paid us by the due date, so I know it works.

We never upset our customers by asking them to pay. My business was always self-funded, and it grew through repeat business from existing customers and referrals.

The 3 Key Steps

1. Invoices: Get Them Right.

So simple, SO effective. Customers don’t pay invoices with queries on them.  If you don’t find out about a query until after the due date, your payment will be already overdue.

“If you don’t have time to do it right, when will you have time to do it over?” John Wooden

2. Call Before the Invoice Is Due.

Don’t leave it until your invoice is well overdue before you contact your customer. Call before the invoice is due to find out if there might be a hold-up with payment.

This call isn’t to ask for payment. It’s just to make sure there’s not a problem that might delay payment. If you come across as a customer service hero in this call, it can help build your reputation as a great supplier.

3. Resolve Queries ‘Super-Fast’.

Resolve queries instantly if you can. Resolve the query with grace and then ask for payment. Done well, this can also build your reputation as a ‘can-do’ supplier.

Did you know it was that easy? It is!

To your business success!

Jan Reeves - GET PAID! Masterclass author