Timely customer payments are one of the keys to the success of the company's development - they ensure a smooth circulation of cash flow, which further provides the opportunity to regularly expand the range of stocks, purchase new fixed assets, improve the company's efficiency, etc. However, almost every entrepreneur has encountered a situation where a client is regularly late in paying bills. How to get customers to pay their bills on time? We offer six solutions to improve customer payment discipline.

1. Stricter payment conditions
Although flexible and customized payment terms for each customer can certainly improve the relationship with the specific customer, there are debtors who will use your hospitality to their advantage and delay your especially suitable repayment term. In such cases, it is recommended to throw politeness aside and dictate a stricter and shorter payment term. Perhaps such a tactic will motivate the client to pay more smoothly.

2. Specific payment date
If cooperation with the client is regular, it may be necessary to agree on a specific payment date every month, just like in a bank. Choosing a relevant date will allow you to send an invoice for the amount to be paid ahead of time, while the client will be able to plan his cash flow in time to make the payment on the specific date.

3. Advance payments
If the cooperation with the client has been started relatively recently, or if he makes orders of an impressive size, an advance payment may be a suitable solution. Perhaps requesting an advance payment will not be a popular decision in the eyes of your customers, but it will ensure the planned cash flow for your company. In addition, advance payments allow you to safely establish new collaborations with customers - after gaining trust, the payment terms can be varied as far as possible.

4. Factoring
In the framework of factoring (purchase of invoices), the customer transfers the payment not to the seller, but to the financial institution. The financial institution pays up to 100% of the invoice amount to the seller immediately after the invoice is issued and sent to the customer. Depending on the client's country of registration, size and operational history, banks and also alternative financiers offer factoring services to individual clients. Capitalia also offers factoring for Baltic companies.

5. Late payment penalty
It is often possible to motivate customers to make payments on time by imposing late fines. The fine can be, for example, 2% for each day late. In cases where the customer is able to make the payment, but forgets about it or deliberately delays it, the introduction of a penalty can motivate the customer to make the payment faster.

6. Gratitude to timely payers
It is also possible to use a strategy that is completely opposite to fines - to reward those customers who make payments on time. Gratitude should be such that it motivates the client to pay on time, but so that it does not create a hole in your company's budget. Good examples would be gift cards, discounts for future purchases, etc