In a perfect world, your business will always get paid, and get paid on time. But of course, being in the real world, this does not always happen – sometimes you have to wait for a while to receive payment that is owed to you for goods or services you have supplied, and the waiting can dramatically affect your operations in the meantime.
If you are having difficulties dealing with late payments, there is one thing you should know: you should have a set routine or system for dealing with issues like these, from following up via email, letter, or telephone to taking more drastic measures.
What to do if you are expecting a large payment
If you have sent out an invoice for a large amount of money, always make sure the customer has received it. Contact them to confirm if they have received your invoice, and if they have, ask them to check it and see if they have any queries or issues with the invoice as well. You should contact them at least a week before the due date, so you can address any issues before it becomes a late payment. Besides, contacting your customer to confirm if they have received the invoice is a good way to solidify your business relationship as well, and gives your customers a good impression about the way you do business.
Make the payments easier
One other thing you can do to prevent late or non-payment from your customers is to give them several options for payment. Aside from getting paid through cheques and other traditional forms of payment, you can make it easier on your customers to pay you by offering electronic transfers or even a direct debit arrangement.
Be quick to action if payment has not been received
If the due date has arrived and you have already confirmed their receipt of the invoice yet the payment has still not come, you need to take quick action. Call your customer immediately and be clear about your concerns and what you expect from them. Do not be afraid of being more assertive, and be sure to explain to them the consequences of late or non-payment. Once you have contacted them and have received their agreement to pay, follow this up regularly as well.
Be wary of regularly late-paying customers
If you have noticed one of your customers making late payments a habit rather than a once-in-a-blue-moon occurrence, it may be time to assess the state of their business. Try to find out about their situation so that you can see whether they can still afford to do business with you (and you with them) on credit. You have to weigh the importance of this particular customer to your business – is it worth losing their orders because of late or non-payments? How important are their orders to your company? If you think you will gain more by stopping your supplies to them, then it might be a better choice rather than suffering from a bad debt in the end.
Numerous cashflow issues can be avoided by addressing late payments and making sure your customers pay on time. But if you would like to have better peace of mind when it comes to cashflow, you can always benefit from the cashflow and financing solutions provided by specialists like ultimatefinance.co.uk.
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