Getting paid correctly and promptly are the foundations that ensure your business runs as smoothly as possible. Late paying customers can be hard to deal with and a strain on your time as a business owner.
There are ways in which you can manage this burden, so it doesn’t become a problem in your business. We’ve put together a few tips to help you deal with late payments.
Call the late payers immediately
You know the ones, some people are synonymous with being late payers. This behaviour from certain people is commonplace, and not just a one-off blip.
Be sure to contact them immediately after you have sent your invoice out. Ask them questions, such as, have you received our invoice? How would you like to pay this invoice?
Continue to follow them up, and be sure each time to remind them that you are chasing them ‘again’. This insistence will lead them to realise you will not forget nor will you let up until payment is received. Eventually, they should get the message that it is easier to pay straight away.
Try and get honest answers
Coaxing information from someone who owes money could be hard. Perhaps they don’t wish to tell you that money is tight at the moment, but it’s important to know where you stand.
Understanding their financial position means you have a better understanding of when they will honour their invoice, as well as helping you decide if this is a business relationship you want to continue with.
Demanding immediate payment may not be a good idea for people struggling financially. Work out a payment method that suits the pair of you, preferably before you start work.
Make your payment terms clear
Having your payment terms clearly on each individual invoice and on the original contract will help you keep on top of payments.
You should also send a friendly reminder to your clients in advance of the payment date. This way there can be no confusion as to when the invoice was sent or received. It’s often the only gentle nudge needed.
You can find out more about your legal recourse options here.
Use the latest cloud accounting software
Managing those late payers will be far easier when you can manage invoices and payments remotely or on the go.
Cloud accounting software allows you to log in wherever you are so you can keep on top of payments with delay. You can chase people up and have detailed evidence and proof of when people should have paid their invoice.
The software will notify you when the client has received your invoice as well as when they have paid it. This will make keeping track of payments far easier. What’s more, it will automatically send timely reminders for those clients who need a little nudge.
Make sure it doesn’t happen twice
Unfortunately, the reality is you are likely to encounter the odd late payer in your early days. These prove to be steep learning curves.
Remain professional and polite. Review your procedures. Now could be a good time to introduce a clause regarding advance payment for a client with a history of late paying. This way you never do work for someone with no reward. You could also establish late payment fees to act as a deterrent to late payers in the future.
Also, don’t be afraid to drop clients who regularly pay late. The chances are they will continue to do it and your cash flow will suffer.
Have you ever suffered late payments? What policies have you put in place to avoid them? Please share your thoughts below.