Thirty-Day Payment Terms: How to Get Paid Promptly
Does your business operate on thirty-day payment terms, meaning that your customers have thirty days in which to pay their invoices without incurring any charges for late payments? Late payments can cause you to have severe cash flow problems, so it’s important to get paid promptly.
Why Thirty Days?
Unfortunately, for business owners who would prefer to get paid promptly, a thirty-day payment term is the norm and attempting to shorten the term is likely to drive customers into the arms of your competitors.
Net Thirty Vs. Thirty Days Due
The major difference between net thirty and thirty days due is a reflection of the statement date vs. the invoice date. Net thirty translates to thirty days from the order date (when work is started) while thirty days due is thirty days from the invoice date (when work is completed). To get paid promptly, it is advantageous to either use a net thirty payment term or to send out your invoice as soon as the job is completed.
Inform Your Customers
To get paid promptly, provide your customers with a payment schedule which clearly explains the amount owing, your payment terms, and the due date. Also, let your customers know what constitutes late payment and how much extra they will be charged if they don’t make a payment on time. If you have a late-paying customer, a friendly phone call may be in order.
Get Paid Promptly by Offering Discounts
Just as you can charge interest for late payments, you can also offer discounts if your customers pay before the thirty-day due date. The most commonly used discount is a 2% discount for payment within fifteen days, but there’s nothing to stop you from incentivizing early payments by offering larger discounts.
What to Do When You Need Cash
In spite of your efforts to get paid promptly, you will likely experience a cash flow crisis at some point. Flipside Capital is here to help you with financing to get you over the hump. Please contact us for more information.