Small Business Contracts Touchpoint Legal

Do Your Customers Pay You on Time? 3 Ways to Get Paid

Do your customers pay you on time? 

If you have a small business, getting paid by your customers on time can be crucial to maintain cash flow. So what things can you do to improve your chances of getting paid on time? This blog will provide you with some tips on how to keep the cash coming in and get paid on time!

#1 Have written obligations in place 

It sounds quite obvious, but having a written agreement in place with your customers is fundamental to setting payment expectations. Having a properly drawn up agreement in place tells your customer how much you want to be paid and when you want to be paid by. If you don’t have a properly drawn up agreement in place, your customers may be left with the impression that you’re not all that serious about the terms under which you conduct your business. Putting a formal agreement in place with your customer means that both parties understand the obligations that each party has to the other and can help your customer to know that you are serious about being paid for your goods or services.

#2 Incentives and Disincentives 

When you decide to put a written agreement in place, make sure that there are clauses about enforcing payment terms.  You can use incentives or disincentives to encourage payment! For example,Touchpoint Legal Small Business Agreementsas an incentive for your customer to pay on time, you might include a clause stating that if they pay within a certain time period they get a slight discount, but if they don’t, they will have to pay the full cost of the services.

Or, if you prefer a disincentive, you might include a clause which requires your customer to pay interest on outstanding money if they haven’t paid you by a certain date.

Whether you choose to use an incentive or a disincentive, you are more likely to get paid on time by your customer if you give them a reason to do so.

#3 Address Customer Concerns

Sometimes, a customer may be reluctant to pay for your goods or services because they are unhappy with what they have received. Having a written agreement in place tells your customer exactly what they can expect to receive from you – so can help you to manage the customer’s expectations.  You are more likely to be paid by your customer if you can point to the agreement and say to the customer – ‘we agreed that I would provide you this in exchange for that.’ This may address some of your customer’s concerns.

You need to make sure however, that if something has gone wrong with your product or service, and you have obligations to your customer under the Consumer Guarantees, that your written agreement reflects your obligations under these laws and that there is nothing conflicting in your contract that can land you in trouble with the Department of Fair Trading or the Australian Competition and Consumer Commission.

If you need help with putting in place a written agreement to encourage your customers to pay you on time or to set out the obligations that you and your customer have to one another, don’t hesitate to call me on 02 8005 06902 or email me at angela@touchpointlegal.com.au. I’m here to help!

This blog is for information purposes only, does not constitute legal advice and should not be relied upon as such. If you require legal advice please contact us or another registered legal practitioner.

About The Author

Angela Stackelbeck

Angela Stackelbeck is a Legal Director at Touchpoint Legal. She has practised law in Sydney in large corporates and private practice, for over 20 years. Angela's broad experience allows her to uniquely offer the dual benefit of practical legal expertise gained in private practice and commercial pragmatism learned from the in-house environment. You can contact Angela at angela@touchpointlegal.com.au or on 02 8005 0692 or 0404 872 644.