An unpaid invoice blurs the lines between collapse and survival. It cannot be denied that late payment is an ongoing problem for many businesses. More often than not, business owners find themselves chasing clients to make them pay, but despite the effort, things are always easier said than done. When clients take longer to pay the bills, it can greatly impact the firm’s cash flow. As a result, it will not be easy for businesses to invest in their operations.
It is no secret that late payment has been considered a problem for many years. If businesses do not have the ability to maintain a steady cash flow, they always end up borrowing money. The problem is, repaying the money owed may not be easy. The good news is, there are still some techniques that businesses can use to meet this challenge and to ensure that firms that owe you money will be able to pay you back.
Require upfront payment
One approach businesses can use to avoid late payments is to require upfront payment. Many companies may expect credit terms to be part of the service and when you take this approach, they may choose not to do business with you. Make sure you set the company’s expectations before requiring upfront payment.
Act promptly when chasing overdue
Be sure to act promptly when chasing the debt once it becomes overdue. If the credit terms are 30 days, you can start to chase the overdue account by issuing a reminder on day 31. The reminder should clearly state when the payment should be made. You can pass the debt over to a reputable debt collection firm if payment is not received by your deadline.
Late payment fees
You can also apply a late payment fee for clients who have failed to settle their debts. However, you need to take a few things into consideration. You need to make sure that the terms and conditions adhere with any legislation or regulation that applies to the industry or business. However, you need to keep in mind that this move may have a negative effect on customers. As a business owner, you need to be prepared to lose customers.
When you face late payments it is important to state your terms and conditions and this only be specified on the initial invoice so your clients will know when you expect to be paid. When dealing with a late payers, you have to ask yourself if you are still making money of this client. If you are losing money, it is about time to let the client go.
