After delivering your products or services, it is important for you to get paid as early as possible. Encourage your customers to pay early by offering them prompt payment discounts. For example, you can offer a 2% discount to customers who pay within 10 days of the invoice date. Early payment is particularly important if you think there is a chance that a customer may be in financial trouble. If there is a longer wait, there is a greater risk that you might not get paid.
Customers who take forever to pay up can have negative impact on your business’s cash flow. You need the cash to pay your expenses, including salary for your employees and money you owe your vendors. If you don’t have a good cash flow, you may need to take out a loan and incur interest expenses to pay your business expenses.