As a business owner, one of the most important things to keep in mind is your relationship with your clients. Having strong client relationships can help propel your financial success by generating steady sales, repeat customers, and a consistently healthy cash flow. On average, it takes around 38 days before a small business invoice gets paid in Australia. This was back in January of 2017 and just eight months later, that number has improved to 34 days.
While payment times are getting quicker, it still falls four days short of the 30-day credit term. Delayed payments can accumulate pretty quickly and before you know it, you’ll end up using your other resources just to keep your business afloat. This significantly hurts your cash flow and your business might struggle as a result. To prevent this from happening, credit management and client relationship should be your top priorities. In here we’ll be discussing the importance of building relationships with your customers and how to ensure they to pay invoices on time. This way you do not need to deal with a debt management professional.
How to manage client relationships
Focus on communicating effectively with your clients.
Effective communication with your clients is a staple in maintaining healthy customer relationships. Taking the time to show that you’re available to your clients suggests that you genuinely care about their level of satisfaction. This doesn’t mean that you should always be available 24/7. You just have to be there when they need you so that you can provide timely, thorough communication.
It’s also important that you listen to the feedback of your clients by ensuring that all of their concerns and ideas are heard of. When clients feel honest and comfortable with you, the level of trust increases and they are more likely to be encouraged to settle their invoices on time.
Exceed client expectations.
Building your reputation as a reliable business will go a long way in forging strong relationships with your clients. By consistently delivering exceptional results, clients will feel more inclined to trust you and position yourself as someone they can work with for the long term. Think about your clients and consider their needs. Determine what are the things that are valuable to them so you can tailor your products/services according to their personal preferences.
A small token of appreciation can further enhance your relationship with loyal customers. The key here is to go above and beyond in even the smallest of ways that your clients will surely appreciate.
Be open to your clients.
A crucial element in forging strong relationships with clients is being open to them. Practicing a policy of openness gives them the opportunity hear your side of the story. It can be tempting to always agree on things to avoid confrontation with your clients, but you should never set aside your own viewpoints just to satisfy them. If you have the best interest at heart, let your client know by openly discussing about it.
Don’t hesitate to express your opinions confidently and always be open to your clients with how you feel. By doing this, your clients will respect your own beliefs and will see your opinions as valuable ones.
Share your knowledge with your clients.
Clients may feel slightly disconnected when they don’t fully understand your area of expertise. As a professional business owner, you have the responsibility of enlightening them with your products/services so they know what they’re getting into. Sharing your knowledge with your clients will help maintain strong relationships while also building trust and confidence in the process.
3 ways on how to encourage clients to pay on time.
1. Build a solid client credit strategy
To ensure a continuous flow of cash, developing strong contingency plans and selecting reliable clients are key. Before you reach an agreement on providing high value products/services to a new client, it’s best to do a background check and look into their credit limit and history. A proven track record means you can build a lasting relationship with that particular client and you can trust them to be able to settle invoices in a timely manner.
This doesn’t necessarily mean that you should neglect startups, it’s just that you should exercise caution with new clients before providing high value products/services.
2. Set credit terms
You need to have a solid outline ready for collecting debts. While it may offer a ton of flexibility on your customer’s part, allowing a longer credit limit can hamper your cash flow in many ways possible. If you do decide to give an extended credit term, it’s a good idea to incentivise early payments by providing them with a prompt payment discount. Not only will this appeal to your customers, but it also gives them a bit more freedom while promoting healthy cash flow.
You should always have a debt collection plan ready once the term expires. To avoid getting into any dispute with your customers, always discuss this first before they make any purchase.
3. Seek out unpaid invoices with the help of a debt collector.
When an invoice has gone unpaid for an extended period of time, this may require you to approach your client in order to settle it immediately. The thing is, it can get quite tricky to reach out to your client without souring the relationship, especially when communication has gone downhill and the client feels like they cannot pay on time. You can only do so much when chasing unpaid debts until it proves too taxing.
To help save you time and energy, consider outsourcing your unsettled accounts to a debt collection agency. Professional debt collectors do the work for you so you can focus on doing other important things such as running your business. This streamlines the debt collection process and helps you avoid friction with client relationships. Don’t hesitate to seek out unpaid invoices with the assistance of a debt collection agency to remind your customers to pay on time.
When a client feels valued, they are more likely to settle their accounts on time. By maintaining client relationships, you’ll help encourage customers to make timely payments which will benefit your business by improving cash flow and generating consistent sales. Follow these tips on how to manage client relationships.