Tips For Keeping Customers Paying

Every company has them, or eventually will—buyers who just can’t, or won’t, pay their invoices on time. It’s a continual problem for some B2B sellers, and one that has no easy fix because of the many reasons companies make for paying late, or not at all.

In many cases, firms can reduce their number of bad customers through early-payment discounts and other incentives.

In a recent blog post, C2C Resources, a commercial debt collector, offered up some tips on how to increase the likelihood more buyers pay on time. The company also advises use of eInvoicing, understanding, however, that electronic billing in no end-all answer to improving problems related to accounts receivable.

Reacting to efforts to make government eInvoicing mandatory, R2C cites a recent study by E-Invoicing Platform that found $1.2 trillion dollars are owed to businesses by other U.S. businesses, with one of the leading causes being linked to the processing of paper invoices.

“We strongly agree that e-invoicing is the way of the future, and businesses should be taking advantage of the cost and time saving benefits,” Todd Tinkler, C2C Resources president, said in a statement that also challenged the concept of a government eInvoicing mandate. “While more companies should be encouraged to take advantage of eInvoicing, we have to wonder the effectiveness, should the email get stuck in a spam folder or all together forgotten in a full email box.”

In its blog post, C2C offered up other suggestions on motivating prompt payment, including letting customers know about early-payment discounts via an email marketing initiative.  “You could motivate others to follow in the prompt-paying customers’ footsteps,” the company noted in the blog post. “Positive incentives always make for a better customer experience.”

Other advice noted in the post to encourage prompt or early payment included:

Listing discount incentives on invoices and contracts

By making it clear on invoices or contracts that there is a discount for prompt payment, the invoice will become more important when billing comes around, C2C notes. “An incentive of 2/10 net 45, which means payment is due in 45 days, but if paid within 10 days, they will receive a 2 percent discount, is quite common,” the post notes. “It will cause accounts payable departments to put your invoice on the top of the pile when paying invoices.”

C2C also advises that sellers invoice twice a month to get invoices to customers earlier to decrease the payment cycle and increase cash flow.

Providing better credit terms

Sellers may list your credit terms on their invoice or contract, but often buyers will try to negotiate better credit terms. “Create a rule that if a customer does not have an incident of late payment over a period of six months or a year that they can be extended better payment credit terms,” such as “Net 45” instead of “Net 30,” C2C advises. “Customers will appreciate your flexibility. Always revoke these privileges if it becomes a problem.”

Creating a ‘valued’ customer group

This can be accomplished in several ways. For example, sellers could host an event, but buyers don’t need to know the event is due to their prompt payment. Companies can make a list of customers who promptly pay and rank it by purchase order totals. They can then invite the top 5 percent or 10 percent of prompt-paying customers, depending on the size of the list, to personal one-on-one events, such as lunch, dinner, golfing or happy hour, the blog post notes. Sellers also can thank your customers with invitations to exclusive events that will help them excel in their industry.

Getting to know customers

Companies can accomplish this by creating a personal connection. “A handwritten note can go a long way,” C2C notes in the post. “By humanizing your company, you can create a deeper connection than simply through your product or service.

C2C also suggested thank customers for their prompt payment, especially on a large order, and sending holiday cards and growing relationship between the businesses.

Send a gift

Before embarking on gift-giving, sell should establish rules for when a customer should receive a gift, such as for rewarding regular prompt payment for repeat customers, C2C advised in the blog post. “By implementing a valued customer event or a 1-1 meeting, you will be able to get to know the customer better and can send a personalized gift as a thank you,” the company said.

Companies have a variety of resources available to them to help in the collections process, including specialized software that automates manual processes to help increase cash flow. But as more and more companies are being pressured to extend due dates to 120 days or more, it becomes increasingly possible for buyers to experience their own financial issues over that extended time, thus making payment collection that much more difficult for sellers.

Tips such as those C2C advises may help ease the pain.