Cash flow is often a concern for those involved in the staffing industry. You require liquid funds to administer payroll on a regular basis. You also have other expenses to worry about, such as the rent for your office space and the bill for your staffing services website.
One of the most common issues with cash flow is the payment of invoices. You bill your clients, then wait 30, 60, or even 90 days for them to settle their bill. In the meantime, you need to keep administering payroll and paying your bills. The picture can become even bleaker if clients are late paying their invoices.
These tips can help you change the story at your staffing agency. Use some or all of them to encourage your clients to pay their invoices sooner and keep the cash flowing through your agency.
1. Offer a Discount for Paying for Staffing Services Early
This may sound counterintuitive to you, especially if you spent a good deal of time working out your price points. Offering a discount just may not seem to be in the cards because you have to maintain optimal profit margins.
Nonetheless, this can be a great technique for encouraging your clients to pay invoices sooner. A small discount may encourage them to pay early, so they can save a little bit extra. This keeps the cash flowing through your agency. It keeps your clients happy too.
2. Adopt a Penalty to Discourage Late Payment
Offering a discount for paying staffing services invoices early is a “carrot.” You can also adopt a “stick” method and enforce a penalty for late payment. This discourages your clients from paying late since they’ll end up paying more.
Be sure to communicate the penalty clearly, and be sure to enforce it when someone is late. Many companies communicate a late-payment policy, but they don’t enforce it.
3. Collect a Down Payment from New Clients
Before you provide staffing services to new clients, ask them to put a deposit on their account. This can help you manage your cash flow more readily, and it also secures you in case the new client pays late or doesn’t pay at all.
You might also create a policy that allows clients to get their deposit back after a certain amount of time. This can encourage your clients to pay you on time whenever they have an invoice.
4. Create Payment Plans for Trusted Clients
Some clients may not be able to pay you in full every month. In that case, create a payment plan for them to ease their payments. This can help keep cash flowing and ensure that your clients are paying you on a regular basis.
The details of the payment plan can also include terms about making early payments, which can encourage clients to pay if they happen to have some extra cash.
5. Communicate about When Payments Are Due
One of the simplest things to do is send reminders to your clients. If your invoices are due 30 days after receipt, send out a payment reminder three weeks after the invoice goes out. Your clients are busy, and the invoice may have slipped their minds. The reminder might get them to pay the invoice sooner.
Also be sure to tell your clients about the different ways to pay for their staffing services. Offering them alternative payment methods, such as credit cards, can mean you see payment sooner rather than later.
There are many ways to encourage your clients to pay their invoices sooner. Try out some of these techniques and see the difference it makes in when you’re paid for staffing services.