If you run a small business, you have undoubtedly encountered those difficult customers who don’t pay up in time. Most of your customers may be fine, but there is always the odd one who doesn’t pay up.
This can be very frustrating. Not only is it stressful, but it can also affect your cash flow, and sometimes you don’t know whether you’ll get paid at all.
However, you can make it easier on yourself when you have a client who won’t pay. Here are a few tips to help make it easier, as well as ideas for how to avoid getting into this position in the first place.
Always Follow Up Immediately
If you don’t follow up quickly, your customer will think they can get away with this, both now and in the future. So as soon as a customer does not pay up by the due date, take action.
Put someone in charge of chasing up invoices. As soon as it becomes due, a friendly phone call can work wonders. Or you may want to start with an email and then move onto a phone call.
Have a system set up for how to approach this situation, but make sure you follow up and that you persist. Your customers will then know that you always follow up and that you will not simply forget about the money owed.
Be Firm But Friendly
Getting customers to pay on time can be a challenge, and some customers will come up will all kinds of excuses to avoid paying. You must be mentally prepared for this. If you are not tough, your customers will walk all over you.
But you should always stay friendly and professional. This customer may provide you with more business, and you don’t want to ruin your relationship with them. Besides, they may have genuine reasons why they cannot pay.
Provide Alternative Options
You want to get paid, hopefully without destroying your business relationship in the process. So look at the alternatives.
Could you provide your customer with an extension? Perhaps they would benefit from paying in installments? Or you might want to set up a Direct Debit so your customer does not have to remember to pay you each month.
If it looks like they are in serious problems and you may not get anything back, you might even offer to take a reduced payment.
Talk to your customer and find out what the problem is. If they genuinely cannot pay, this may not be a big issue as long as you can provide an alternative, and this is why good communication is essential.
Hire a Factoring Company
If you don’t want to go through the hassle of collecting overdue invoices, you may want to hire a factoring company instead. Use a service like the Factoring Directory to find a suitable company, and they can then pay you directly and take charge of collecting the money.
They take a cut of the overall payment due, so you do end up getting less. But that may be well worth it to save the time and hassle of chasing up unpaid invoices.
Invest in an Invoicing System
A good invoicing system can bring your invoice template online and make your life a lot easier for you. make your life a lot easier for you. Look into signing up for an online system, and there are many to choose from. These can remind you about all the payments due automatically, and it can alert you when you need to follow up with a customer, which can speed up the process.
Try to Avoid late Payments in the First Place
The above are all effective ways of dealing with overdue invoices. But often the best thing you can do is take measures to prevent late payments in the first place.
Make sure it is as easy as possible for your customers to pay you. If you only accept checks, this may not be convenient for them, so accept credit cards, direct transfers, and even e-wallet payments to make it easier to receive payments.
You could also provide customers with incentives for paying quickly, like a 5% discount if they pay by a certain date. That can be a great motivator, and it can help to build good relationships because you are effectively rewarding your most reliable customers.
Follow Up with Your Invoices Effectively
Having to follow up with customers when they fail to pay invoices can be a frustration. It can be even more frustrating when you run a small business and you have to do the chasing up yourself when you would rather be focusing on other tasks.
Use these tips to make receiving your money a less stressful and more successful process. And try to take steps to dissuade customers from paying late in the first place, which will make your life a lot easier.
Owen Benson has been running the family business for several years, it being handed down Father to Son for 4 generations now. In his spare time he enjoys sharing his business knowledge in his articles, motorsports (watching and participating) and hiking.
