Winning strategies to reduce invoicing hassles

Nothing can hurt your company faster than slow payment or nonpayment, but you can’t waste your accounting department’s time begging clients for money.

A good payroll financing strategy can help save your company from cash flow crunches. Payroll financing is one of several strategies that can help you reduce invoicing hassles. Here are a number of things you can do to successfully invoice clients and receive payment in a reasonable time.

  • Do your homework. Some clients are problems from the get-go. That’s particularly true if a company has a questionable reputation or is in dire straits financially. Others just simply hold on to their cash for as long as they can, regardless of the impact on vendors. Don’t let this happen to you. Most conditions that can impact payment can be uncovered relatively easily. Ask that potential clients fill out a credit application and then study it carefully. Do you know others who might have done business with this prospective client? Ask around. A quick online search can reveal red flags.
  • Know when to walk away … know when to run. Your salespeople are trained to get clients — not turn them away. The temptation is to accept every new client, not only because they feed your bottom line but because it can be a real morale downer when you have to tell a commissioned salesperson that you’re walking away from the sale. Make sure the salesperson understands the situation and knows it’s not his or her fault.
  • Demand payment upfront. You wouldn’t do this with your best customers, but what about those who are in the gray area, when you’ve accepted them as clients but have reservations about doing so? Perhaps they have a history of slow payment, but they’ve not stiffed anyone, at least to your knowledge. In this situation, you might demand at least a portion of payment upfront — a high enough percentage to allow you to at least break even if it’s the last check you receive from that customer. Sure, the potential customer might turn you do down immediately on those terms, but you’ve lost nothing but a little stress and a possible cash crunch.
  • Request progress billing. If you’re working a project that will take three months to complete and you anticipate payment within 90 days of invoicing, you won’t see payment until half a year from now. In the meantime, you’ll have labor and materials costs of your own to pay out of pocket. Any time you think the assignment will be long and involved, don’t hesitate to set up a payment schedule sequenced with project milestones. This typically breaks a large project into three component billing stages, but break it down into however many installments make sense in your situation. In each stage except the last — usually after job completion — you hold your continued activity as leverage.
  • Discount for early payment. Your clients may have 30- or 60-day payment policies, but can you incentivize them to respond faster? If your margins will allow it, discounting as little as 5 percent for payment within 10 days or fewer of billing can encourage a swifter response.
  • Consider payroll financing. While this strategy won’t get you paid any faster, it will enable you to wait out slow payment without the stress of cash flow hiccups. A percentage of the invoice will be advanced to you, allowing you to keep the cash flowing.

 

As a full-service payroll financing company providing services including payroll funding, invoicing, payroll taxes and credit monitoring, TemPay enables staffing agencies to focus on growing their businesses.