Some businesses may already consider late payments a way of life, but your business doesn’t have to suffer from it as well. Whilst it’s quite normal to have a late or overdue payment at some point, this doesn’t necessarily mean that you have to resign yourself to it if a lot of your customers are not paying you on time. If you are constantly dealing with customers who pay late (or who don’t pay at all), you may need to bring in some more drastic measures just so your cash flow isn’t significantly affected. There are specific things you can do so you can avoid late or overdue payments. So what are these things? Here’s how you can easily and efficiently avoid late or overdue payments from your customers.
Be selective and do research
Of course, when you are just starting, you may not be able to be as selective as you would like, but you can still do a bit of research about the businesses with whom you are planning to transact. Do some research on the background of your clients, and this will pay off in terms of time, money, and trouble in the end. If possible, do a credit check, particularly when you are dealing with large financial transactions. You should not risk going into any kind of arrangement with a client who doesn’t have a good credit score or history.
Make your payment terms clear
It’s your responsibility to ensure your clients understand your policies when it comes to payment. When arranging a contract or agreement, add a clear (and highly-noticeable) policy of payment and make your invoices as clear as possible by including the payment terms and the consequences of late payment. It’s best to be concise in your wording, and include a precise due date rather than simply stating ‘due in one month’ or ‘due in two weeks’. You can also add a policy for late payment which states that you will charge a ‘late payment’ fee for bills that go past the due date.
Offer different payment methods
Sometimes, customers can find it difficult to pay because they have to go to the bank to deposit a cheque, or they have to follow a payment method which isn’t convenient for them. But you can make it easier for clients to settle their invoices by offering different payment methods as well. The easier it is for your clients to pay, the faster you will get your money. If you want, you can set up an option for online payments, especially now that most everyone goes the digital route in terms of paying their bills.
Offer an ‘early payment’ incentive
Another thing you can do to avoid or prevent late payments is to offer an ‘early payment’ incentive. For example, you can offer a discount to customers who pay their invoices before their due dates, and the discount will be based on the customer and the amount or level of work you have done for them.
Avoiding overdue or late payments should be one of your priorities. But if you have done all that you can and are still having difficulties, it’s time to turn to the expertise of a debt collection agency such as to be sure that your invoices are collected and paid on time.
