A recent study found an eye watering 53% of all invoices sent in the food and beverage industry take 26 days to get paid. No matter what business you operate, if you wait almost a month for payments you will find yourself in a cashflow hole.
It is estimated that over 46 percent of food and beverage businesses will close their doors within five years because of poor cashflow.
The figures are overwhelming for all food and beverage distribution business.
It's not all bad news for distributors, there are many different ways you can avoid late payments.
EasyVend has put together 4 different ways your distribution business can avoid late payments and increase cashflow.
1. Make your customers payment process simple
The biggest reason why many customers don't pay on time is because of the payment process. If your customer has to go through a long payment process, they will not pay the invoice on time, it's as simple as that.
Paying an invoice should be easy, your customer should be able to pay instantly. Implementing a pay now button is a fast and easy way your customers can pay their invoices. Once a customer places an order, their invoice will be emailed to them with an attached pay now button. All they need to do is enter their card details and click submit. Fast, easy, simple!
2. Enforce customer credit limits
Many customers who already owe an amount to your business will continue to order and accumulate more debt. Enforcing a customer credit limit will reduce the impact late payments have on your business.
Using a payment gateway, you will be able to set a unique credit limit. Once a customer passes the limit, they are denied permission to order until the remaining total has been paid in full.
3. Automate your invoices
Automation is changing the food and beverage distribution industry. If you are invoicing customers manually you could be playing a role as to why your business is receiving late payments.
Automating your invoices process makes invoicing easy. Once your customers order a product the invoice should be automatically sent to the customer without any human input. The sooner your customers receive their invoices the sooner you will be paid.
4. Set up auto payments for repeat customers
One of the worst habits distributors make is manually filling out the same invoice week after week. It is far more efficient to set up an auto payments for return customers.
Setting up an automatic payment option for repeat customers significantly slashes your administration time and decreases the risks of receiving late payments.
With late payments becoming a serious issue in the food distribution industry, NOW to implement solutions that eliminate the risks. Using the tips mentioned your business will go a long way to reducing late payments from your customers.
For food vendors and distributors, EasyVend supports and automates every part of your business, freeing you up to grow your sales unlike other ERP systems that are designed more for wholesale suppliers than for you.