Getting Paid quicker by clients – Cashflow
Cashflow and debtor days
Getting paid on time is crucial to all businesses, no matter the industry and never more so than during a pandemic. Cashflow is a key feature to move your business ahead and plan your budget. However, it is one of the trickiest areas within businesses that is always challenging to manage. That is one of the reasons so many companies, around the world, have struggled during the Covid-19 crisis. Nevertheless, there are some tricks that can help improve your cashflow.
Managing the gap created between the day you get paid and the money your company is paying out is vital for your business viability. Therefore, reducing the debtor days and improving your cashflow will keep your payments on track and budget planning smooth. But how can you reduce your debtor days?
What can you do to reduce the payment times?
Since the pandemic started, many companies and organisations changed their structure and moved to a working from home policy. As a result, most payment processes are reliant on online / digital transactions. However, many organisations are struggling to provide a reliable and easy payment process.
The lack of clarity might confuse customers and suppliers, which will lead to late payments and potential loss of business relationships in the future. Therefore, it is a must to give clients a better customer experience by providing them with a secure and fast payment system and clear payment terms.
Legl is a legal-tech venture that enables quick and secure payment solutions from your clients. The company offers software that could be integrated within your case management system (including Proclaim) maintaining your cashflow. Other features include multiple accounts for office and client money tailored to your business’ branding, improved data security through encrypting and faster payment from clients through pre-populated client request links for emails and invoices. Additionally, the software enables lawyers to include a unique reference number in their bill enabling the client to pay easier and quicker. As a result, the payment can be allocated faster on your management system.
To keep on track with your cashflow it is important to monitor your payments and invoice due dates. It is recommended to use an automated notification on your case management system to notify you about invoice due dates and when the invoice is a day overdue. Therefore, you can plan your budget and costs whilst reducing your administration time.
Payment terms and fees for late payment
Another method to aid getting paid on time is to clearly state your payment terms. It is crucial to state all your details such as bank account, amount, various payment options, late fee charges, invoice due period and payment date. All these elements will give clarity to the payee. Additionally, the late payment charge will encourage the client to pay on time. It is also recommended to send them a reminder notification about their overdue payment.
Offer different payment methods
For example, Pay Pal, Debit / Credit card making the payment convenient for clients.
Offer instalment payment plans or discount for early payment
Both options improve your business’ chances of getting paid on time. The first situation, through agreement with the client, allows you to plan for part payments rather than waiting for the whole invoice being paid late. The second one encourages the payee to pay on time through an incentive – saving time and paying less.
Talk to your suppliers / clients
Good communication between you and your clients / suppliers will benefit your cashflow. Through mutual understanding you can negotiate payment days, which will affect your budget planning and cashflow distribution positively.
By following the above ideas, you can improve your cashflow and reduce debtors’ days. Good communication and an efficient and reliable system will contribute for your business success even during the pandemic.