If you’re an accounts receivable professional or a business owner, you’d know the headache of following up overdue payments all too well. You may use a range of strategies to collect overdue payments, from agreeing on payment plans with your debtors to sending the invoice for debt collection. No matter the strategy you choose for collecting late payments, it doesn’t address the problem at its core — getting customers to pay on time in the first place.
This article outlines how to get customers to pay on time, including tools and processes that will create a great experience for your customers while improving your cash flow.
Inefficient debt collection has a high cost
The most effective way to get customers to pay on time is to review your business’s processes, from booking appointments through to debt collection. Not only do many businesses have payment processes that are inefficient for the customer, ineffective internal processes also make it difficult to make meaningful improvements across your business.
Take, for example, a pool services company, which we’ll call Blue Lagoon Pool Services and Supplies.
Before using Spenda
The business has been running for a few years and consistently has problems with late payments. When customers book in a pool service appointment, they need to call the business. Payment information isn’t collected at the time of booking.
Once one of the business’s staff services a customer’s pool, they have to go back to the store and email or post an invoice to the customer. At this point, the products and services are delivered, but all of the financial risk remains with the business while they await payment. For overdue payments, the process of debt collection is inefficient, and the business doesn’t have a system to view all overdue payments and send reminders in one place.
Sometimes an invoice will be overdue for months until someone remembers to follow up the customer. Blue Lagoon Pool Services and Supplies also doesn’t have a process or tools to confirm payment details with the customer when booking their appointment. Continuing with this lack of structure will keep damaging the business’s cash flow and growth prospects. Further, the business’s own invoices then become late, which creates a flow on effect of late payments across many Australian SMEs.
See Blue Lagoon Pool Services and Supplies using Spenda
With Spenda's Workflow Payments
The business has a busy day ahead with appointments at several customer’s homes. Before technicians visit each customer, the service management tool on Spenda’s platform has collected the customer’s payment details and pre-authorised payment. Once a technician has finished a customer’s appointment, the job is marked as complete, and the customer is automatically charged for the cost of servicing the pool along with any products and supplies that may have been used.
Spenda’s business management platform automatically updates the business’s transactions and financial accounts, accounting software, stock levels, and records all details of the appointment on the customer’s profile. With these workflow payments in practice, the business is paid as soon as the appointment is complete, which improves the business’s cash flow and provides the information needed to further optimise other business areas such as stock control and service management. The customer doesn’t need to think about manually making a payment, and they ask the technician to book their next service in a few months.
How to stop chasing late payments
There is a range of changes and digital tools businesses can implement to get paid on time, improve cash flow and reduce the amount of time people spend on following up overdue payments. Thinking about the problem using the customer’s journey is a good way to identify what changes you need to make.
Regardless of your industry, you should consider implementing the following changes to get paid faster:
- Collect customer payment details at the time of booking or scheduling
- Automatically send invoices immediately upon goods or service delivery
- Make it easy for customers to pay, with a range of payment options and methods
- Implement a system that allows you to view all invoices in one place
- Automate your processes wherever possible, particularly your payment processes
- Integrate data across your business for improved stock management.
How do you automate payment processes?
The first step in getting your customers to pay on time is to automate your payment processes. To automate your payment processes, you need a platform that allows you to quote, invoice, schedule and collect payments and follow up overdue payments in one place. For your customers, this same platform should allow them to pay more than one invoice in a single transaction, along with options for how and when they pay.
Give your customers different payment options
Customers need options for how and when they pay. These options may include credit card payments, bank transfers or financing options. SpendaCollect currently offers credit card and bank transfer options, with the ability to access financing for invoices coming soon. In terms of when customers pay, a platform, like Spenda’s that provides the infrastructure to automate payments allows customers to choose whether they:
- Pay immediately
- Schedule a payment for a future date
- Split the payment into instalments.
Make managing your payments a breeze
With an integrated system for all of your payment and business management needs in one place, you’ll be able to improve your cash flow, address bad debts, manage stock more effectively and invoice customers quickly and automatically. The features of MySpenda, the powerful new interface for B2B and B2C businesses, provides a range of solutions:
- Better bill presentment options (choose to view and pay a single or all invoices in one place)
- Flexible payment options allowing customers to pay via credit card or bank transfer, and save the payment preference
- Pay multiple invoices in one transaction
- Faster payment settlement
- Lower payment processing fees (1% up to 75 cents for bank transfers and 1.5% with no cap on card payments)
- Fewer errors with data collected and integrated automatically across systems.
For B2C businesses, overdue payments often arise when someone has already delivered a product or service in the field. The pool and spa industry, where technicians visit customer’s homes to work on their pools, often deals with late payments due to outdated systems and processes, or no system at all.
Our tailored business management platform provides pool and spa businesses with the systems and tools they need to get paid on time. The integrated Point-of-Sale (POS) system allows businesses to accept payment on the go, while the intuitive drag and drop functionality makes it easy to use. Further, the flexible payment options, including the ability to pre-authorise payments, allows your business to implement workflow payments. In effect, this means your customers can input their payment details and, once you’ve delivered the goods or services, you can charge the customer on the go. All of the business’s transactions and accounts are updated in real-time, making reconciliation efficient even if your team is working from multiple locations out in the field.
With Spenda’s suite of tools and products, you can not only improve your business’s debt collection processes, but you’ll also create a better customer experience. Our platform provides everything that businesses need to get paid faster in an intuitive interface that your customers will love.
Click here to book a demo and learn how you can improve your payment processes and get customers to pay on time.