5 Ways to Maintain Your Interiorscape Company’s Other Green
While most of us get into the interiorscape business because of our love for horticulture, another important aspect is getting paid.
I much rather be caring for plants, creating designs, and interacting with customers than sending out invoices, bookkeeping, and following up on past due payments. I really detest getting after my clients for their money even when it’s far past due. It’s the last thing I want to deal with as I’m sure most owners would agree. So here are five ideas that may prevent that nasty task and help keep you in the green.
Use Accounting Software
First, having good procedures and systems in place will help prevent financial loss. Investing in accounting software can save a company owner time and a ton of frustration. Personally, I use Quickbooks which helps me automatically invoice clients and keep track of missed payments. There are many other options out there such as Freshbooks and Square that can set up reoccurring invoices and other accounting benefits. Once I have input all my client information, Quickbooks will remind me to email my customer’s invoice 35 days before the due date. Although my payment terms are net 30 — I’ve found by sending their bill the week prior, my checks arrive more often before the 30 day deadline. Especially with large corporate companies where payments have to go through two or more departments before being approved and mailed from their corporate location far away. Those extra five days makes a huge difference.
offer Early Payment INCENTIVEs
Offer an early payment discount. I’ve always believed in the old saying, “you catch more bees with honey than vinegar.” In other words, providing a client an opportunity to save money in return, can improve your cash flow. I know this benefit works, because I use it any chance I get. When some of my nursery vendors started offering a 5% discount for COD, I paid them up front every time.
Accept Credit Card
Accepting different payment options. Sixteen years ago with my first interiorscape business, I only accepted cash or check payments. This usually was fine since most of my clients were commercial and only paid by check. Now, some of those same corporate clients only want to pay with a credit card. While having the ability to accept credit cards creates new fees, some risk, and a few possible hassles, it reduces my payment wait time from 30 days to 2 days. The other important benefit is my increased client base. Whether working with the public in person or online, having a merchant service is almost a necessity.
Encourage ACH Payments
Like processing a credit card, creating an Automated Clearing House (ACH) account almost guarantees timely payments. The ACH process is a network system among financial institutions. Basically, with your client’s permission, your bank takes your client’s money directly from their bank account each month on an agreed upon day. From my experience, the downside can be getting another business to allow you direct access into their company funds as well as the commitment to the same day every month. But when they do, this is a very secure and reliable payment method with low fees.
implement Late Fees
Sometimes the positive methods aren’t enough and that’s when implementing late fees can motivate a client to pay. Legally, you can’t start charging a late penalty until a client has been previously notified in writing nor can you make up any amount. Before adding penalties and failure to pay guidelines to your client contracts, find out what is permissible by your state. Otherwise, you could end up in some hot water.
When economic times started getting difficult, it became the norm for companies to get behind in their payments or simply cancel. If the work already has been done, offering a payment plan or extensions can be a viable solution. Especially if the delinquent client has been with you for many years, reducing their balance owed may be better than losing them completely. I’ve seen companies reduced to their beginning roots and some were able to come back strong with time and restructure. When you show your loyalty and appreciation during the tough times, you can create a life-long client and the green will follow.
Photography by Pictures of Money
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