Whilst dealing with late payments it is recommended that small business owners face their late payers as soon as possible to resolve the situation in an agreeable and diplomatic manner.
Ensure Contracts include Late Payment Terms and Conditions
Ensure that contracts include late payment terms and conditions. This should refer to interest charged on late payments and costs from any debt recovery or legal action taken. Ensure that your customers are aware of all these conditions at the start of a business relationship.
Communication is key
A good line of communication is key to dealing with customers especially when the time comes for them to pay you. Sending an invoice to customers should be a simple process now that you have a good communication line with them. Ensure that you are communicating with the person that is responsible for payment as well if they happen to be different and you have their contact information as well. All invoices should be sent via email giving you date and time records. Always remember to follow up on invoices to ensure that your customer is happy and try and diplomatically agree on a date that the invoice will be paid. This will ensure that disputes over payment will be minimized.
Customer Excuses for Late Payment
If your customers often make excuses to delay payment you can tackle these problems with a few simple solutions.
|Customer has not received invoice
|Written confirmation of date and time of invoice via email should be shown to customer
|Customer has computer problems
|Be firm but diplomatic –ask for an exact date that payment can be made
|Cheque seems to have got lost in the post
|Other payment options other than post should be given i.e. electronically via bank transfer or PayPal
|Person responsible for payment not available as ill or away
|Communication with person responsible for payment should be done via email if they are unavailable
|Company experiencing financial difficulty
|Request monthly payments as soon as possible to minimize your risk
|Customer waiting for payment from their clients
|Request exact date of payment as this excuse should not impact your business. Suggest that further action will be taken in necessary
Reminders should be Sent to Customers
Being diplomatic about late payments can work to your advantage. That is why reminders about late payments can help nudge a late payer into paying. If you do not receive payment after a reminder has been sent then further action needs to be taken. Remind customers about contract T’s & C’s and that interest can and will be charged on invoice amounts that are late.
Highlight that Legal Action will be Taken
When you have tried the above diplomatic methods, but fail to receive payment on an invoice, then you will have to take legal action. Your customer needs to be reminded of this in writing. Your late paying customer may be forced to pay the invoice immediately to avoid legal proceedings against them.