One key way to make sure customers pay you on time is to set out clear payment terms in your staffing agreement. Many small business owners fail to include a due date or any other kind of terms. Please do not wait until you invoice a customer to introduce terms. In fact, it is recommended that you spell them out earlier in your staffing agreement. You do not have to set your terms at 30 days either, you can ask for whichever payment terms work best for your company. Most hospitals will request a 90-day payment plan. However, it is your choice on how you want to conduct business.
One way to overcome slow-paying clients is to request payment terms that demand a portion of your fee upfront. Rather than wait for full payment weeks after the work’s complete, it is perfectly reasonable to ask for 30%, or even 50% of the final fee, before work begins. Many customers will expect you to ask for this. If you are a small business, it is your guarantee that they are fully committed to the project and offer them the security that you are serious about undertaking the work. However, with a Staffing agency, services must be rendered before payment.Â
These days you can skip the paper checks and use one of the many online payment systems available. For example, it can reduce the time it takes to get paid by up to 47%. By using an ACH depositing system. Your DSO (days sales outstanding or aging report) could be drastically reduced, and you could even get paid up to weeks faster or more, with an average reduction in DSO from 4.5 to 2.4 days. When you are setting your payment terms, make sure customers know what will happen if they do not pay on time. Once you have sent out your invoice (on time) send out reminders to let customers know the payment is due soon. It is recommended 5 to 10 days prior to the invoice becoming due. Keep track and pay close attention to the facilities that do not meet their due date. In the staffing industry, you do not want to continue to pour staff into a facility that does not pay their invoices on time.Â
If you do all the above and customers still are not paying you on time, then draw the line. There is no reason to continue doing business with these types of clients. It is obvious that the client may have internal issues such as poor management, high HR turnover, or poor bookkeeping. As a vendor providing a service, it is ok to have an empathetic outlook for the shortage, however, never jeopardize your business.Â
It is imperative to set a standard of expectations during the agreement phase as a business owner who has learned through trial and error. Always remain professional and in charge of invoicing. Do not hesitate to contact the facility on day ten before the invoice deadline and day thirty-one as a reminder that the invoice is now past due. If you have chosen to request late fees after 30 days, do not hesitate to implement late fees. Remember that the value of your employee is at stake. Also, if you are financing your payroll, you are accumulating additional fees daily after 30 days of past due payment.
Your business decisions in this area can hinder your ability to grow. You are also losing revenue because now you are paying out more to funding companies for late invoices. A funding company can charge between 2-25% of the invoice depending on when invoices are paid.
Lastly, there is a sure way to overcome slow-paying clients. To connect with a business coach who can direct you to insurance companies that will insure your invoices. Please use caution with your selecting the right coach to assist you with protecting your revenue.
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