When it comes to small business, cash flow is everything. You owe it to yourself and your employees to ensure your cash flow is predictable and reliable. If your business relies on regular monthly payments from clients, one of the easiest ways to do this is to stop accepting partial payments.
The trouble with partial payments is threefold. They create unnecessary unpredictability in your cash flow, they create confusion when it comes to account reconciliation, and they undermine you as a business owner and creditor in the eyes of your clients. So what are the solutions?
Post Clear Payment Terms, And Stick To Them
It is easier to be firm with your clients if your terms are clear and posted both at your place of business and on your company website. Abiding by the terms should also be a condition of any contract signed by your client.
Invest In An Automated, Online Invoicing And Collection Platform
Regardless of your industry, you should be able to find an automated invoicing and collection platform that works for your business. Not only does this help eliminate excuses such as forgotten checkbooks, it also gives your younger clients the option to pay in the way they are most comfortable - online with a couple of clicks. What’s more, many automated solutions include automated reminders, overdue notifications, and late fee assessments. This means that you spend considerably less time playing debt collector.
Schedule Regular, Smaller Payments
There may be some circumstances under which it is reasonable to allow a client to make smaller payments throughout the month instead of a single monthly payment. For example, if you have a client who tends to receive their pay on a daily or irregular basis (a barber, a temp, etc.), it is understandable that you would want to work with them on payment. Instead of allowing them to drop off whatever they can whenever they have it, work with them to create a manageable payment plan. This will allow you to maintain control of the payment conditions and your cash flow while still giving your client the opportunity to pay on a schedule that works for them.