Know Your Customers – Don’t just extend net terms to anyone; know who you are doing business with. Check their business credit by pulling a credit report on potential clients. A leopard doesn’t change its spots – someone with a history of not paying creditors on time will likely not be paying you on time.
Put it in Writing – To prevent any misunderstandings and strengthen your position in the event a client doesn’t pay on time, include a well-written credit policy in all of your contracts. Clearly detail the payment terms and schedules, as well as the consequences for late payments, and have them sign acknowledging that they agree to it. Never rely on handshakes and verbal agreements.
Keep it Simple – Make it as easy and convenient as possible for your clients to pay their bills. Be sure they are aware when their payment is due and how they can pay you – make invoices clear, concise, and easy to understand. Provide them with options by utilizing other types of payment besides just checks, such as credit cards, online payments, eChecks, direct debit, etc.