The Importance Of Your Payment Terms
Payment terms seem such a small thing in the scheme of your business, but the reality is it couldn’t be further from the truth. Your payment terms affect your cash flow and enable you to balance the books and meet your debts. You must set your customer terms with their specific needs in minds. Just because some businesses offer 60-day terms, doesn’t mean that you have to as well. Each business is different and each has their unique set of issues which affect cash flow on a daily, weekly or monthly basis. You control your cash flow Many small businesses underestimate the power they have on their cash flow. With more and more companies paying their bills later and later, the only option many small businesses have is offering 7 or 14-day payment terms. If you offer 30-days, then businesses can in all likelihood take advantage of your time-frame and extend it even further. Sometimes challenging the norms to benefit your business is the best thing to do. 30-day terms were more popular when organisations sent their invoices by mail; as times have changed, so can the obsolete business terms. 7 to 14-day terms are more popular than you...
Read MoreHow To Ensure Prompt Payment
We all know of the domino effect which can occur when one business fails to pay on time. The company responsible for the initial late payment then sets off a pattern of knock-on effects and cash flow issues to every other business down the line. In an ideal world, all companies should pay their invoices on time. But, in reality, for whatever the reason that is just not the case. With such headlines being floated around last year as “Australian businesses worst in the world at paying their bills on time” and statistics which show that the average amount of time for an invoice to be paid is 26.4 days overdue, businesses must do all they can to ensure prompt payment. So what can you do to ensure your clients pay on time? Maintain good relationships Having a good relationship with your client will make sure that they are just a phone call or email away. This removes any barrier between B2Bs and allows connecting with the accounts department much easier. If a problem does occur, then a simple reminder should solve it quickly. Set your terms to ensure prompt payment Make sure your terms are well defined to meet your...
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