Preventing late payments from customers: This is how it’s done
Posted: Jul 19, 2018
Businesses in the United Kingdom have cash flow issues - in other words, they spend more money than they earn. Customers don’t pay their invoices on time, in spite of the fact that there has been a significant drop in commercial debts, and this has horrific consequences on business. When clients stop paying, you end up with a pile of bills. Needless to say, it’s impossible to keep things running smoothly. Employees want their money, not to mention that the suppliers need to be paid. Chasing after late payments is one of the most unpleasant parts of doing business. You feel rude and awkward, even though the deadline is past. Wouldn’t it be better if you didn’t have to chase after overdue payments? If you prevent delays in payment, then you’ll have nothing to worry about. Late payment is something serious and you should treat it as such. Continue reading to find out what you can do.Ask clients to pay you upfront
Let’s say that you’re a freelancer. Being your own boss is wonderful, but you have to deal with all kinds of issues. The main problem is that customers refuse to pay for the work that you’ve done. This may not have happened to you but, sooner or later, it will. Do you know why? Because people take freelancers for granted. Avoid nasty situations by asking clients to pay upfront. They don’t have to pay you all the money, yet they should provide a down payment. When individuals hire freelancers online, they enjoy a high degree of anonymity. You don’t know who they are, so you can’t do anything in case they decide not to pay, which happens more frequently than you think. Don’t let others take advantage of you. Choose to protect yourself. There is nothing shameful in asking for an initial payment. Everyone does it. It doesn’t matter if you’re a freelancer or running a construction business. It’s a good idea to request a down payment.Set clear terms and you’ll get paid
This might seem obvious, but there are many businesses that don’t make it clear from the beginning that they expect payment. Maybe you’re doing the same mistake. Set clear terms with customers. Tell them exactly when payment is due, how they are going to pay you, and what happens if they are late. The biggest mistake that you can make is to hope that people will be responsible and they will pay their bills on time. Maybe they don’t know the time frame. Or maybe they don’t give a damn. This is the reason why you have to make your point clear. You’re in charge, meaning that you get to decide what’s what. If you consider that 45 days are too much, then change the terms. Issue invoices that need to be paid immediately. Keep in mind that terms like cost, amount, delivery, and payment method can be adjusted at any time.Hire a credit control company
Ideally, you should provide products or services only to individuals who are able to pay. However, you don’t have the time or resources to perform checks on prospective customers. Basically, you take your chances. If you’ve been experiencing problems in terms of late payment, then outsource credit control. An outsourced credit control company will chase overdue payments on your behalf. No, you won’t lose even a single client. Generally speaking, people are afraid of credit control companies. It’s not that these organisations act unprofessionally. It’s just that individuals don’t like the thought of being judged or asked for money, for that matter. When they know that you’re using a credit control company, they will be on their best behaviour. There will be no more strain on your cash flow and you don’t have to rely on the bank overdraft to make payments.Make sure that the invoices get noticed
The design of the invoice helps you stand out. And get paid. In order to get your bills noticed, use coloured paper and envelopes. This will significantly increase visibility. A customer is more likely to notice a coloured piece of paper than a white one. Use what colours and fonts you want, just make sure that you don’t stick to the standard ones. Bespoke invoices are one of the best ways to get someone to pay their invoice on time. You can follow-up with emails and even phone calls, in an effort to ensure that the client has received the notification. Does this mean that you should stop your collaboration with the credit control company? Of course, not. It just means that you can take some action on your own.Simplify the payment process
It’s not enough to have one person in charge of payment collection. What you need is an entire team of people sending reminders and receiving funds. It’s very important to simplify the payment process. Clients shouldn’t have trouble paying off their debts. Consider offering online payment. This will considerably decrease the number of unpaid invoices. Electronic payment is very convenient for individuals because they only have to provide their account information. The sensitive details are stored in a secured database, so when they come back to the website, they need only the username and password. The financial transaction is completed right away, which is convenient for the customer. You, on the other hand, can start receiving payments minutes after having installed the system.
Whether you like it or not, you’ll have to accept checks. Not all people have debit cards or credit cards. It’s true that checks do pose some problems, in the sense that they delay payment, but what can you do? Ask customers to put the check in the post. It’s better than nothing. If you really want to reduce risks, then take into account electronic checks. Basically, you should provide people the option to pay online without using their credit cards or debit cards You have the possibility to save money and enjoy the same security that comes with direct payments.. Just think about it.
Cynthia Madison is a young blogger and economics and marketing graduate. She writes about home, lifestyle and family topics and is a senior contributor to popular niche publications.