How do you ensure customers pay on time?

Communicating your billing and collection policy as part of the on-boarding process for new clients/customers is the first step. So many people shy away from having the direct conversation about fees/prices upfront.

A documented process for follow-up that is carried out by one of your team members who can be completely focused on collections is a plus. Once the account become past-due, they receive a phone call immediately. If they promise to send a check next Thursday and you don't receive it - call them back immediately.

It should be no surprise to most small business owners that collections are the major issue to keeping cash flow on plan. While dunning customers seems like the obvious solution, and it certainly is necessary in collections, it is far from all that needs to be done.

First a business needs a credit policy, i.e. who is allowed to buy on credit and what information will be reviewed on the potential customer prior to extending credit. I find that many firms don't consider a customer's ability to pay or even check credit on potential new customers. However if you have not asked the right questions, you will be burned. Your written credit policy should require (depending on the size of the credit) a d&b report, financial statements from the customer, trade and bank references and possibly deposits before shipment until a credit history has been established.

Assuming that the customer passes the credit test (and you did check references, read the financial statements and d&b report, etc.), then you must have written quotation forms and other communication that shows the customer your payment terms and solicits agreement with these terms (the d&b report can show how closely a customer follows established payment terms with other customers).

Once you have shipped the goods or performed the service, you lose whatever leverage you once had. So the honesty of the customer is paramount. If the customer has been paying other vendors, has decent financials and your invoices are not disputed, the customer should pay on time. For larger invoices, you should call the customer to assure that they received it, that it is in their system and ask for a payment date. Customers tend to pay those who call and not pay those who don't.

Finally, don't be shy about asking for money as if you are going to insult the customer by doing so. The customer is not shy about asking for fast delivery, customization of your product or free shipping. You try to accommodate. The customer should understand your need to be paid as well (and you can be sure they seek to collect from their customers).

Additionally, if you can sell by credit card, you will get your cash in a day or two and it may be worth the fee. This is easier to administer than a cash discount program and customers may take unearned discounts that are a burden to enforce.

Adding to the many good points, I Will say that no company or one policy can assure that all customers will pay on time. In this economy companies are prioritizing payment based on their accounts receivable cash flow or vendor importance. It is very important to know who you are extending credit to and whether or not they are a reliable payer. This can be accomplished by a sound credit policy. Extending credit first starts with a clear understanding of what your expectations are for payment. Then you need to understand what the customer’s payment policy is and have this established in writing prior to the execution of any contract to provide goods or services. Educate your sales staff on what is needed for extending credit. After all they are the ones who set up the sale and work through all the particulars. It is vital to your operation that your sales staff or credit analyst understands the flow of business orders so a proper evaluation can be conducted. Then you must use a source such as Coretera, D&B or many others who supply credit information to review the prospects predictive payment history. Payment priority depends on whether or not you are a critical vendor or someone they can live without. Companies have a tendency to pay critical vendors on time and non-critical vendors when they please. It is not enough to pull a credit report at the time of a new client sale, it is critical to continue to evaluate then quarterly to see if their payment trends have changed. Some services offer credit monitoring that will alert you to any change, good or bad in your customer’s payment trend history. It is equally important to understand the industry trends in the industry you are selling into. The industry trend could be an early indicator of pending customer payment issues. Searching the World Wide Web for news about your customer can yield a wealth of information. I have seen negative news hit the web about a client long before their payment problems start. When there is a negative change, be proactive to review and even discuss the situation with your client. Many causes of late payments are delayed deliveries, unapplied credits, unauthorized deductions, defective parts, late delivery of service promises etc. Proper cash application is critical. It is important to have open and regular communication with the various departments about these issues as companies will us these issues to delay payment. Make sure your invoices are precise and clear. Always be proactive to any situation. Timely and accurate billing, do not delay to call as soon as payment is not received on time. Doing so will train the slower payers to pay closer to the due date to avoid this call.

Create a contract with the customer and add on late fees and interest for late payers..offer a discount for paying on time.

Be wary of how often you contact a client as each state does have laws governing collections.

I think we all agree that communication is the single-most important aspect of continued excellent customer relations - and continued loyal payment for your goods and/or services.
Sending out periodic bills makes any system less efficient than it should be. We recommend setting up every periodic payment system so that you can withdraw your payment either by credit-card, RDC, or ACH. Of the three, ACH (automatic withdrawal from your customer's bank account) is by far the most efficient, and by far the least expensive to you. You can often do this through your own bank, but doing so will be more costly than it need be. You can even set it up so it costs you less than nothing - you can actually make a (small) profit each time your customer pays.
If you choose to use credit-cards, make absolutely sure you know how to read a contract and that you can analyze the "Effective Rate". Since there are literally no laws that govern credit-card processing, the processors, and especially the people who sell for them (I know because I've been one of them for decades), can easily pull insidious little tricks on you over time. Of the literally hundreds of business owners I've dealt with over the years, not one has known how to determine their Effective rate, nor what to do about it. They've been told, for example, "2 percent" or "1.79 percent". In fact, neither of those is true. If your monthly gross revenue volume is over $50,000, not knowing this is costing you unnecessarily.

Good question

by sms ---ccs ( customer calling systim ) --- web mail.

if you have this tools
. we will be sure all or most of our customer they pay on time .

(( good conntact with your customer good collection your bills ))

There are two types of late paying customers:

1. Late payment is an infrequent error.
2. Late payment is a ongoing policy.

Number 1 you normally don't need to worry about too much, but as was mentioned with previous posters, you do need to communicate regularly with both. The main difference is that number 1 is a customer where late payment is rare and resolution is swift, and occasionally is initiated by the customer. Resolution with #2 takes longer and always requires you to initiate contact with the customer.