The market for staffing firms is incredibly competitive at the best of times. Right now, the situation in Canada has increased competition among staffing firms. With talent shortages and low unemployment, market competition has been heating up.
One of the most common challenges facing staffing firms of all sizes is cash flow. Keeping the cash flowing can be quite difficult, especially if your clients keep putting off their bills. While every business has a client or two that presents a problem, staffing firms need the majority of their clients to pay up on time, each and every billing period.
If you’ve been having trouble getting your clients to pay their bills, try some of these tips. They should help you collect on your outstanding invoices.
1. Send Reminders
Do you remind your clients that their bills are due? Depending on the payment period, it may be easy for your clients to forget about invoice due dates. Many staffing firms charge clients with a 30-, 60-, or 90-day payment period. Most of your clients are busy, and the longer the period they have, the more likely it is they’ll forget when the bill is due.
The solution to this is quite simple. You need to send reminders. It’s so easy to send a reminder, yet many businesses don’t and instead rely on the client to remember. A gentle reminder is often all they need.
Today’s technology makes it easier than ever to remind your clients about their bills. You can text or email. Better yet, you can send out automated reminders. Your busy staff don’t need to remember to send out the reminders, and your clients remember to pay their bills.
2. Offer a Discount
This is another way to get your clients to pay their bills on time, every time. All you have to do is offer a small discount or rebate for clients who pay on time or even early.
Many people believe a “punishment” is the best way to get clients to pay on time, so they create late-payment policies. What if someone pays you early or on time? What if you “rewarded” the client for paying you sooner, rather than later?
Your clients will love this policy, and it will get many of them to pay sooner. If the payment period is 90 days, but you offer a discount if the bill is paid before 60 days, you’ll be pleasantly surprised to see many clients pay within 60 days.
Some staffing firm owners wonder if they can really afford to offer a discount. After all, you calculate your charges very carefully. Check the numbers over again, and you may find offering a small discount is better than chasing after late payments.
3. Enforce Your Late-Payment Policy
Most staffing firms create a late-payment policy. They’ll often charge clients interest on overdue payments. Or, at least, they’ll say they will. The terms of payment are usually listed on the invoice, and most include a clause about interest charges.
Have you ever charged interest on your late payments? If not, you could be sending the wrong message to your clients. For the policy to be truly effective, it needs to be enforced consistently.
4. Use Payroll Funding or Factoring
You can sell outstanding invoices to a back office services provider to keep your cash flowing. For a small fee, the provider will take on your outstanding invoices. They’ll give you cash in exchange, and they’ll pay the remainder of the invoice once they’ve collected from the client.
Allowing someone else to chase down late payments frees you up to focus on the tasks you truly need to focus on. With these tips, you can get your clients to pay up sooner.