As a business owner, you may have encountered a situation where customers don’t pay on time. Late payers can be frustrating and financially damaging to your business. But there are ways to mitigate this risk and improve your payment policy.
Here are eight of my essential tips for small business owners with late-paying customers:
Set Clear Payment Terms
Be specific with your payment terms and conditions. Clearly state the payment amount, due date, and late fees or penalties.
Don’t wait to send out your invoices. The faster you invoice, the quicker you’ll get paid.
Use Online Payment Systems
An online payment system can help automate the payment process and ensure you get paid on time.
Offer Early Payment Incentives
Encourage customers to pay early by offering discounts or other incentives for paying before the due date.
Keep in touch with your customers and send reminders about upcoming payments.
Conduct Credit Checks
Conduct a credit check to assess their creditworthiness and ability to pay before conducting business with a new customer.
Use a Collections Agency
If a customer is consistently late with payments, consider using a collections agency to help you collect the debt.
Have a Legal Plan in Place
Be prepared for legal action in case of non-payment. Consult a lawyer and have a plan in place to recover the debt if necessary.
There is no right or wrong answer regarding credit or payment policy. However, implementing the above tips can help you avoid pitfalls and improve your cash flow. If you need assistance managing late-paying customers, seek expert advice to guide you.