OWNER

LATE PAYMENTS CITY

CASH FLOW OASIS

Your Ticket to On-Time Payments: The 5-step, must-have action plan to cut payment delays

AIRLINES

DEPARTURE

ARRIVAL

Make your billing strategy(a priority) 1

Make it easier forcustomers to pay 2

Spend less time onawkward follow-ups 3

Long Layover: What to do when customers won’t pay 5

Stay organized and e�cient (with the right tools) 4

DelayedDeparture

Delayed

Departure

Back in 2009, a survey revealed that 42 percent of small business owners said

“getting paid quickly” by customers was one of the key issues that kept them up at

night.1 Although there have been significant advances in technology and a

plethora of new bill payment options available to consumers, businesses –

especially those in the service sector – still struggle with the issue of late

payments.2

Just one year ago, the NFIB released its “Small Business Problems & Priorities”

report, in which “delinquent accounts/late payments” made a prominent place in

the list. Over 10% of businesses listed it as a critical problem alongside concerns

like the cost of health insurance and the complexity of changing tax laws.

This year, a whopping 39 percent of bill payers admitted to initiating a bill

payment on or after the due date, which means if customers are remitting via

mail, you’re likely not receiving payment until days or weeks after the marked due

date.3 Meanwhile, business owners and administrators are left to wonder: “Is the

check in the mail?” or “Should I follow up again?” This simple delayed action on

the payer’s part causes cash flow strain and, to put lightly, a headache.

There is a remedy, though, for this problem. The reason that small businesses

carry the brunt of the late payer problem isn’t because customers are bullies who

take advantage of the small businesses of the world (for the most part). In reality,

small businesses have fallen behind in both process and technology in their billing

processes – In some part due to the solutions available (or lack thereof).

Make your billing strategy

a priority

Make it easier for customers

to pay

Spend less time on awkward

follow-ups

Stay organized and e�cient

(with the right tools)

Long Layover: What to do

when a customer won’t pay

In this eBook, we will cover:

1

2

3

4

5

1 Intuit, “Get Paid Survey,” 20092 National Federation of Independent Businesses, “Small Business Problems & Priorities,” August 2012, pg. 193 BillTrust, “2013 BillTrust Consumer Payments Survey,” 2013 1

Make your billing

strategy a priorityThere is a di�erence between keeping up with billing and managing billing.

Managing requires a strategy, prioritization, a process, and tools to execute. Just as

crucial as staying on top of your day-to-day selling and servicing, having a proactive

process for managing how payments get from point A (your customer) to point B (the

business bank account) is equally as critical to cash flow.

A tight process will help you to anticipate cash flow threats before they happen and

start to prevent them. With automated customer follow-ups, better tracking, and a

better payment experience for customers, you’ll start to see a marked di�erence on

your incoming cash flow.

Four steps on how to get there:

Do you negotiate payment terms for contracts? Do you take payment in

advance, after services have been performed, or does it vary every time? Outline a

standard process, document it, practice it, and stick with it. It sounds simple, but you

may find that your policy unintentionally varies from customer to customer. Having a

set policy in place will allow you to better predict your cash flow situation. Your policy

should include:

• Payment due date (net 30, for example)

• Terms and conditions of the sale/services, including return or refund policies

• Payment types accepted and how to remit

• Optional: Late payment fee (usually 1-2% of the bill)

• Optional: Early payment discount (1-2% of the bill)

Variations to your standard policy should be planned and viewed as a service to your

customer. We’ll cover ways you can o�er flexibility in your payment terms that still make

cash flow predictable later in this book.

1 Make your process a policy

1 Intuit, “Get Paid Survey,” 20092 National Federation of Independent Businesses, “Small Business Problems & Priorities,” August 2012, pg. 193 BillTrust, “2013 BillTrust Consumer Payments Survey,” 2013 1

2

Do you negotiate payment terms for contracts? Do you take payment in

advance, after services have been performed, or does it vary every time? Outline a

standard process, document it, practice it, and stick with it. It sounds simple, but you

may find that your policy unintentionally varies from customer to customer. Having a

set policy in place will allow you to better predict your cash flow situation. Your policy

should include:

• Payment due date (net 30, for example)

• Terms and conditions of the sale/services, including return or refund policies

• Payment types accepted and how to remit

• Optional: Late payment fee (usually 1-2% of the bill)

• Optional: Early payment discount (1-2% of the bill)

Variations to your standard policy should be planned and viewed as a service to your

customer. We’ll cover ways you can o�er flexibility in your payment terms that still make

cash flow predictable later in this book.

With the policy in place, the next step is to clearly communicate it to

customers – in your upfront contract, on your invoices, on your website, and

even with an invoice insert to get attention. And, even though you’re “cracking

down,” it doesn’t have to appear that way to the customer.

You can balance fees and discounts to get to the behavior you want.

According to the Consumer Payment Choice Study, “Rewards and discounts

are the primary means of influencing consumer payment behavior.”4 Don’t

want to discount your price? Build a discount into the upfront cost. So, rather

than being seen as a penalty, the payer will get the regular price (seen as a

discount) but get the added cost if payment isn’t timely.

It can be di�cult to be stringent with customers when it comes to enforcing

on-time payments, but providing positive reinforcement for paying early or on

time can be more motivation, and certainly a more positive experience.

2 Clearly communicate your payment policyto customers

Did you know 20% of business owners admit to forgetting to invoice or

follow-up on an overdue invoice? Take an assessment of your process. Is it

timely/costly to get invoices out the door? Do you find yourself

procrastinating on billing? If yes, then take a look at some invoicing tools

(many available for free) that can get invoices to your customer instantly

over email. Even if you’re thinking that some of your customers prefer a

paper invoice, you might be surprised at how quickly you can convert the

customer base. You can spend drastically less time and money getting

invoices out the door while actually improving the experience for many of

your customers.

3 Invoice quickly and track overdue payments promptly

It’s often one of the biggest reasons consumers like working with

small or local businesses – the relationship and the flexibility. If a

customer requests to split up a lump sum owed across six payments

instead of two, and perhaps over a longer period of time, you’re likely

willing to comply with that option (something he or she couldn’t find

with a large corporation). But, consenting to the request should not

leave a question mark as to when you’re going to get paid. Breaking

from the standard process does NOT mean an indefinite amount of

time for payment due.

The easiest way to o�er flexibility, a great customer experience, and

get paid reliably is by using an automated payment plan. Rather than

setting dates and hoping your customer puts a check in the mail, you

can enter credit card or bank account information into a billing

software, set the payment terms and dates, and click save. Your

customer will receive automatic reminders and receipts, and you’ll get

paid on the dates laid out. Plus, your customer will appreciate your

flexibility and the convenience of the automation.

4 O�er flexibility on payment terms as a service

4 TSYS, “2013 Consumer Payment Choice Study,” 2013, Pg. 35 Intuit, “Get Paid Survey.” 2008

Bottom line, if your customers have a clear understanding of when

and how they will receive bills, they will be more likely to pay

ontime.

2

3

Make it easier for customers to pay you

In the last two years, three out of ten consumers have changed the way they pay their bills.6 And, right now, over 50 percent of all bill payments

are being made electronically. The great news is, with the new technologies available, paying is evolving from the have-to-do-it closing step, to an

occasion to have a positive interaction with customers – and even a marketing opportunity.

The payment process is an extension of your service; it should be easy, seamless, and even pleasant. Just like you customize your work to what the

client wants, the process provided to remit payment should provide options too.

To create that seamless process, just follow the acronym PAY:

Payment Type Accepted - Access to Pay - Your Follow Up

Payment Type Accepted

Debit cards have surpassed checks to be the leading choice for payment preference, according to the 2013 Consumer Payment Choice Study.7

Additionally, respondents in the focus group showed “a clear distaste for check writing.” However, when the bill amount goes to $300+,

respondents shifted their preferences from debit to credit cards, citing additional consumer protection and rewards points.

The Short: Find an electronic payment processor that enables to you a�ordably accept debit and credit card payments, including echecks.

(Covered in next section)

Quick Cost-Saving Tip: eCheck Payments

Respondents prefer debit cards because the charge is debited directly from the bank account without accruing debt.

eChecks o�er the same convenience to the customer, but at a fraction of the cost to you. Transaction costs are

typically flat fees as opposed to a percent of the charge - a di�erence of, say, $0.55 versus $3.75 for a $150 transaction.

6 BillTrust, “2013 Billtrust Consumer Payments Survey,” 20137 TSYS, “2013 Consumer Payment Choice Study,” 2013, pg 5

3

4

How CustomersPay Their Bills:

Access to Pay

It’s true, all of this technology has spoiled customers into expecting to be able to pay over the phone, in person, online, on an automatic schedule,

and even on a mobile device. While this might sound like an accrual nightmare, there are processes and tools to help you manage (covered in

more detail in the next section).

The Skinny: Provide multiple access points for payment – at a minimum: online, over the phone, in person. If your business has recurring bills for

the same amount (think gym memberships, monthly service fees, subscriptions), set up auto-pay. Customers not only expect it, but will switch to

competitors to get the convenience.

4

5

Spend less time onawkward follow-ups

You don’t like them, your customer might even be embarrassed when they receive them – payment follow-ups are a bummer all around…or are

they? Perhaps a new perspective is in order. What if payment reminders (the friendly, proactive kind) were communication opportunities to reach

out to your customer with nestled marketing messages? Mind. Blown.

Introducing the Y in PAY: Your Follow-up

Just as you spent time mapping out your billing strategy, think about your follow-up strategy. If you had your customer’s attention, what would you

want to ask/say? Here’s a sample of the payment touchpoints and follow-up schedule:

DAY TOUCHPOINT CONTENT

Day 1 Initial Bill The Basics: Amount due, due date, payment terms, how to remit

Day 25 Friendly reminder email (5 days before due date)

Goal: Prevent forgotten bills

Day 31 Emailed or mailed receipt

Goal: Provide document of transaction, get feedback, encourage referrals

Include transaction details

Link to a feedback survey or tear o� and return survey about your business, employees, or service.

Add a reward or discount for interacting with your social pages.

Subject: You have a payment coming due on XX/XX

Body: Your payment for invoice #____ is due on ______.

Click here to pay now or make checks payable to ______.

Reminders can be sent automatically from your billing system or

appear automated if it’s sent from your company email alias. Rather

than seeming like a personal note, customers read template-based

payment reminders as a business-as-usual service and not as

unnecessary hounding.

5

6

Include transaction details

Link to a feedback survey or tear o� and return survey about your business, employees, or service.

Add a reward or discount for interacting with your social pages.

Follow-ups don’t have to be the awkward “Are you gonna pay that bill?” conversation. And as a way to cut down on forgotten bills, a

friendly email reminder in advance of the due date is a great service to customers. Create and save an email template version that you

can send with a few clicks.

Receipts are just as critical, and also an opportunity for continued business. Try bundling your standard receipt information with a link

to a feedback survey, ways to recommend your business on Facebook, Yelp or Twitter, and even a future discount or reward for

referring other customers.

The Mind-Blower: It’s all in the details. These small aspects of your billing process are often what get left to the wayside when

schedules get busy, but they are the important opportunities to take advantage of to get feedback and promote repeat business.

6

7

Stay organized and e�cient (with the right tools)

So what can the right billing tools actually do to save time, make the process seamless, and cut out late payments? Use the following chart, to see what

your business would need at each step in the process:

THE SALE

This could start with

a walk-in visit, a

contract, a phone

call, an online

signup, or a meeting.

THE BILL THE PAYMENT CORRESPONDENCE DOCUMENTATION REPORTING UPSELL/RESELL

You may currently

mail or email invoices

or pay a third party.

Cash, check, credit

card – however you

take payment.

The back-and-forth

with your customer:

Payment reminders,

receipts, late

payment follow-ups.

Matching it all up –

the payment to the

invoice or sale, and

then to the

customer.

View current and

historical data, so you

can see how your

business is doing, on

demand.

An often forgotten

about step.

Customer

Management (CRM)

Electronic Invoicing

or Recurring Billing

Debit and Credit

Card Processing,

eCheck Processing

Automatic

Notifications

Invoice & Payment

TrackingStandard or Custom

Reports, Dashboard

Customizable

Notifications

Store customer

information in a

secure, searchable,

organized system.

The right billing

solution can do this,

plus tie together the

payment activity, for

a full record tied to

each customer.

An invoicing software

with click-to-pay

allows your customer

to pay online.

Billing schedules can

automate the

collection of

recurring fees.

The ideal billing tool

has payment

acceptance built-in.

This way, you don’t

have to spend hours

marrying the

payment information

with the billing

information.

Automated payment

reminders and

receipts can save

time and also save

the awkward late

payment phone calls.

If you can customize

the templates, even

better.

You can also track the

status of payments

online, rather than

waiting for a check in

the mail.

Saves A TON of time

that you might

otherwise be sorting

through multiple files,

spreadsheets, and

documents.

Look for key features

like custom reporting

and access to reports

on a mobile app.

If your system allows

you to customize

notifications, you can

use the receipt to

upsell/resell.

You should also be

able to include your

social accounts on

invoices to increase

exposure.

THE STEP

THE TOOL

NEEDED

HOW IT

HELPS

For any business, time is money. Spending time on basic operations instead of growing

your customer base translates into a real expense. Multiply the estimated hours you spend

in a given month on administrative billing activities and with the average cost you might bill

for an hour’s work, and you can estimate your current time cost of billing every month.

If you have to spend hours in spreadsheets to understand your receivables, it’s di�cult to have an accurate picture of the health of the company. Any tool that

can help to manage customers, get paid faster, stay organized, and improve the experience for customers will go a long way in speeding up your receivables.

Billing and payment collection is just one piece of the cash flow pie, but the one that can be the easiest to improve with a little planning and execution.

Ex: 20 hours spent X $100/hr = $2,000/month

7

8

PAY STATUS

DELAYED

DELAYED

DELAYED

DELAYED

DELAYED

DELAYED

DELAYED

DELAYED

DELAYED

DUE DATE

YESTERDAY

YESTERDAY

YESTERDAY

LAST WEEK

LAST WEEK

2 WEEKS AGO

3 WEEKS AGO

1 MONTH AGO

JUST GIVE UP

CUSTOMER

MAT VOUGE

KRISTIN NOODLES

SARAH JOJO

MATT SLOWING

PATRICK JONAHS

ZACH HIGHERY

JIM YOLOSON

KEAH GUITARI

ALI PRINCE

AMOUNT

$320

$150

$100

$1,000

$500

$1,500

$2,000

$500

$200

RE-ROUTINGWHEN CUSTOMERS WON’T PAY

9

OWNER

Long Layover: What to do

when customers won’t pay

Follow up with the appropriate amount of directness

If you’ve sent emails and left voicemails, and still no payment, at this point a mailed

letter is in order.

The first overdue letter should be helpful, the second concerned, and the third politely

punitive. Restate the means for payment, include a duplicate final invoice, and the next

steps if unpaid.

Keep a collection agency in your back pocket

While it’s not ideal, customers tend to respond quicker if third-party collection agencies are

involved because it can a�ect their credit. Calling in a collection agency costs you money and

can potentially harm the relationship with your customer, but sometimes it’s your only choice.

Make sure to note in your receivables policy when a third-party collection agency might get

involved.

Be Professional in all correspondence, phone calls, and means of redress

The guidelines set forth by the FDCPA protect the rights of the customer to be treated

fairly in debt collection. As frustration mounts, it might seem liberating take a brazen

tone, but it’s not productive and can often make the customer dig his heels in more.

Plus, you could get sued for harassment. Stay polite and professional in all

correspondence.

You’ve done the work or produced a product, and now the customer wants to keep their

money (and most likely your work as well). Non-paying customers can be detrimental to

cash flow, so how can you get your payment before it costs your business?

10

OWNER

LATE PAYMENTS CITY

CASH FLOW OASISKnow when to let it go

If you’ve hired a debt collection firm and still haven’t received payment, you need to see if it’s

costing you more to continue pursuing this debt than the actual amount you’re owed. At this

point, it’s best to learn what you can from the experience and then walk away. As frustrating as

it can be, sometimes it’s best to just let it go.

Check-in: Written policies and satisfaction

A written policy of terms (as covered in the first section) should not just have generic payment terms and remittance dates, but

should be very specific to the client. It should include what work you intend to do, how often you intend to get paid, and

whether the payments are based on specific dates. Perhaps most importantly, the policy should include steps the customer

should follow if they’re not happy with the product or service.

Then, monitor customer satisfaction often. Get written confirmation throughout the project that the work completed is what the

customer wants. It can be tedious, but it can be an invaluable tool when it comes time for the customer to pay the bill.

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Key Takeaways: Your checklist

The basics of how to bill and collect from your customers are easy enough – tell them how much, when it’s due and how to pay. But, you’ve come to

discover following these steps isn’t always that simple, and customers don’t always do what’s requested.

Use this checklist as an assessment of your own process to see where the biggest gaps exist, and where you should get started first!

Start with your payment policy

Document a detailed billing and payment policy

Clearly communicate it to your customer, including in upfront contracts and on the bill

Promptly and consistently bill after services rendered

O�er payment plans as a service if a customer requests it

Try o�ering early payment discounts or establishing late payment fees

Follow the acronym PAY

Payment Type Accepted

O�er debit card, credit card, and echeck payment options

Access to Pay

Provide instant access to pay in multiple ways: online, in person, over the phone, on an automatic schedule – where applicable

Provide secure payment account storage, so customers don’t have to provide payment information over and over again

Your Follow-Up

Send proactive payment reminder emails

Send emailed receipts of the payment that prompt for service feedback

12

Stay organized and e�cient

Use a searchable customer management tool (or CRM), preferably one you can access from multiple places

If you invoice, try switching customers to electronic invoicing – and even better, click-to-pay electronic invoicing

If you collect service fees on regular intervals, try setting up recurring billing to automate the bill, collection, and receipt

Try using a billing solution that integrates with your payment and/or customer management tools – this will save you a lot of reconciliation time

Use systems that o�er custom reporting (or even mobile reporting) to keep you apprised of business performance anytime, anywherE

When a customer just won’t pay

Follow-up with a mailed series of three letters (escalating in tone) with the appropriate amount of directness

For the last resort scenario, keep a collection agency in your back pocket

AboutOver 19 of the 26 million small businesses in the US are in service-related industries. In the past, most

payment solutions have focused on servicing enterprise-size or retail-focused sectors and do not meet the

needs of businesses that provide services to clients, members, students, donors, patients, and customers.

Software solutions have been expensive, don’t integrate with invoicing and customer management tools,

and don’t provide the level of service a business with limited resources needs.

PaySimple provides a customer-centric, complete solution tailored to the needs of service-related

businesses. Its cloud-based software promotes the business’s ability to foster client relationships by

enabling access to pay by any method – electronic invoice, recurring billing schedule, in person, over the

phone, or by online payment via credit card or echeck. And, it syncs all activity with the customer

management tool. Its real-time tracking of activity then provides data insights to a business’s best

customers as well as overall cash flow performance, enabling business owners to drastically save time

running their businesses while improving their customers' payment experience.

Learn more about PaySimple at www.paysimple.com or by calling 800-466-0992. Follow us on Facebook, Twitter, LinkedIn and Google+.

Ready to check o� some of that list?

Get a free, no-obligation consultation from a billing expert by calling:

800-466-0992

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ResourcesBillTrust, “2013 Billtrust Consumer Payments Survey,” 2013

http://mktg.billtrust.com/rs/billtrust/images/Consumer-Payments-Infographic.pdf

Intuit, “Get Pai d Survey,” 2009

http://http-download.intuit.com/http.intuit/CMO/intuit/press_kit/intuit_billing_manager/IntuitBillingManagerGetPaid_SURVEY.pdf

National Federation of Independent Businesses, “Small Business Problems & Priorities,” August 2012

http://www.nfib.com/research-foundation

TSYS, “2013 Consumer Payment Choice Study,” 2013

http://www.tsys.com/2013ResearchReport/index.cfm

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