It’s no laughing matter – late payments can seriously hamper business cashflow, especially if the invoice is for a large amount. In fact, most businesses have to close up shop within the first year of operations, simply because there is a lack of funding or the cashflow dries up. And, guess what? Late payment issues are one of the main reasons for this. To avoid these hazardous and possibly life-threatening scenarios, here are some practical tips.
• Do some background research
Before allowing your customers to make use of a credit line from you, do a little background research first. There’s nothing illegal or awkward about that – it’s just a matter of going through the right procedures and engaging in due diligence as a business enterprise. If you’re dealing with another business, check how many employees there are and how many customers they deal with. If you’re dealing with individuals, ask for their employment history. There are simple, discreet ways to do this, and it could save a lot of trouble later on. When in doubt, conduct a background check.
• Keep your customers in mind
One of the biggest blunders a fledgling business can make is assume that the customer will make all their payments on time, will pay the correct amount, and will pay on the terms that the company dictates. It doesn’t always happen that way. When making a proposal for payments (for installments, etc.), keep your customer or client in mind. Although it is natural to want full payment as soon as possible, considering the ability of the client or customer can make it easier for him or her – which means the likelihood of them truly paying the full amount on time is much higher. It will also allow you to plan the financial aspects and your cashflow much better in the long term.
• Make your payment plans clear
A lot of issues can arise if, for some reason, your customer or client doesn’t understand the terms of payment – either because they don’t know what the amounts are, what dates they are due, or both. When dealing with customers, it would be beneficial to draft a paper in which all the details are clearly mentioned. Don’t be ambiguous and state ‘3.5% interest,’ for example – also mention the exact amount that is due. Go over the payment scheme and make sure your client or customer fully understands it and has no concerns or questions.
• Remind your customers
This is often not done because we don’t want to appear like a nagging debt collector, but research has shown that a large number of customers don’t pay their dues on time (up to 33%) simply because they claim that the invoice was misplaced or lost, or because they claim they never received it. Friendly reminders could be very subtle, and a well-meaning customer often appreciates it. Remind your customers in an amiable way – it could save a lot of trouble down the road.
Every business has to deal with customers that pay late or insufficiently sooner or later; it pays to keep that in mind and consider it a natural occurrence in the day-to-day act of doing business. However, it’s also wise to avoid delinquent customers and take precautions. One of the best precautions you can take is that of seeking help from established cashflow solution providers such as ultimatefinance.co.uk if you see that you may require cashflow assistance in the future.
• Do some background research
Before allowing your customers to make use of a credit line from you, do a little background research first. There’s nothing illegal or awkward about that – it’s just a matter of going through the right procedures and engaging in due diligence as a business enterprise. If you’re dealing with another business, check how many employees there are and how many customers they deal with. If you’re dealing with individuals, ask for their employment history. There are simple, discreet ways to do this, and it could save a lot of trouble later on. When in doubt, conduct a background check.
• Keep your customers in mind
One of the biggest blunders a fledgling business can make is assume that the customer will make all their payments on time, will pay the correct amount, and will pay on the terms that the company dictates. It doesn’t always happen that way. When making a proposal for payments (for installments, etc.), keep your customer or client in mind. Although it is natural to want full payment as soon as possible, considering the ability of the client or customer can make it easier for him or her – which means the likelihood of them truly paying the full amount on time is much higher. It will also allow you to plan the financial aspects and your cashflow much better in the long term.
• Make your payment plans clear
A lot of issues can arise if, for some reason, your customer or client doesn’t understand the terms of payment – either because they don’t know what the amounts are, what dates they are due, or both. When dealing with customers, it would be beneficial to draft a paper in which all the details are clearly mentioned. Don’t be ambiguous and state ‘3.5% interest,’ for example – also mention the exact amount that is due. Go over the payment scheme and make sure your client or customer fully understands it and has no concerns or questions.
• Remind your customers
This is often not done because we don’t want to appear like a nagging debt collector, but research has shown that a large number of customers don’t pay their dues on time (up to 33%) simply because they claim that the invoice was misplaced or lost, or because they claim they never received it. Friendly reminders could be very subtle, and a well-meaning customer often appreciates it. Remind your customers in an amiable way – it could save a lot of trouble down the road.
Every business has to deal with customers that pay late or insufficiently sooner or later; it pays to keep that in mind and consider it a natural occurrence in the day-to-day act of doing business. However, it’s also wise to avoid delinquent customers and take precautions. One of the best precautions you can take is that of seeking help from established cashflow solution providers such as ultimatefinance.co.uk if you see that you may require cashflow assistance in the future.
