By streamlining your customers' payment experience, you reduce your DSO and improve customer sentiment. Follow these 3 steps to get small business customers to pay faster.
Running a small business is tough. In speaking to countless small business owners throughout my career, one thing became clear – a desire to do accounting was decidedly not the motivating factor in their decision to launch a new business venture. Expense management, time-tracking and invoicing customers are not the things that the small business entrepreneur thinks about when they are getting started. Ultimately, one of their biggest challenges becomes trying to find the time to deal with these tasks. Fortunately, for small businesses there are many automated solutions to help them manage the accounting side of the business including their own receivables. Products like QuickBooks, Freshbooks and Jobber all help these small businesses to track their efforts and collect their money.
But what about the other side of the equation — the challenges that small businesses face in automating payment of their bills and that large businesses face in collecting from them? In the same way that neglecting to collect payment will hurt small business because they’ll be losing out on cash flow- failing to pay their bills on time will also cause the business to suffer. Suppliers will stop providing products,. Distributors will stop providing delivery services. The result? Business will grind to a halt.
The main issue that can prevent small businesses from not paying their bills on time is the same one that can hinder them in collecting – a lack of time.
Running a small business is a 7-day a week, 24-hour a day commitment and often, the back office work like accounts payable takes place during off hours. The small business owner looks at every invoice in detail before paying their bills. That SMB owner or office manager will often look at their invoice on a Sunday afternoon and if there’s an error or things aren’t clear they put off the payment for another day. Monday morning rolls around and the cycle begins again. That lingering invoice question is often left unresolved until an AR clerk comes calling many days later to see why a bill hasn’t been paid.
What’s the best way to solve this? The answer is simple: make it easy for the small business owner to pay you with these three simple steps:
1. Provide all the information they need
An invoice without any supporting documentation means little to the small business owner. “Have I paid this invoice?” or “Did I receive the goods?” are just some of the questions that they will ask themselves. If they only have old paper or PDF invoices to look back on, they won’t get the answer they are looking for and will quickly move on to their next task. Providing access to an online portal with a complete history of their invoices, as well as all supporting documentation will make it easy for them to decide they should pay your invoice.
2. Give them the ability to ask questions or raise disputes when they want to
The invoice isn’t always accurate or clear. Don’t wait until your AR clerk calls 45 days after an invoice is due only to then deal with a simple question that could have been answered in seconds. Give your customers the ability to collaborate with you in real time. Enabling your customers to ask a question – even outside of regular business hours – gives your team the opportunity to address any questions and put your customer in the position to pay their invoice.
3. Make it easy for them to pay
Small business owners wants to pay their bill and get it off of their desk, so give them lots of options to do so. Credit card, ACH, and scheduled recurring payments all make it easier for your small business customer to pay. Give them the ability to pay one-time or store their information in a secure vault, leading to one-click payments.
Ultimately the goal is to empower your customer to pay you. By giving them the information to make a payment decision and the tools to execute on their choice of payment in real time, you will make their life easier. A more streamlined payment experience for your customer results in reduced DSO for you and an increase in customer happiness!