Ways to Improve On Time Payments of Clients

finance late payments

Delayed payments of clients is one of the reasons why your business would eventually end up in bankruptcy. You want to be patient in waiting for them to pay but you also don’t want to force them if they really have nothing to give. Besides, there are laws protecting consumers that you need to go around.

The point is that they owe you something and you can’t just sit there waiting for them to come and pay you. Otherwise, it could negatively affect your business. Here are some ways for you make them pay you on time.

Clearly define penalties

This should be clear to your clients right from the start. They need to know that not paying on time has repercussions. They will then try to pay you on or before the due date or else they would pay for. This also goes without saying that your invoicing process should be clearer and stricter. You won’t meet complaints if they totally understand the amount they have to pay and the deadline for payment.

Give formal warnings

Start with an email where you remind them in a friendly way that they have already gone past the deadline. You may also warn them about the legal repercussions of their failure to pay the debt. This is a good practice since some of them didn’t really intend to not pay the amount. In most cases, they have just forgotten it so they end up paying late. At this stage, you need to be careful with your words since you don’t want to lose them as clients right after they have paid.

Change the terms for consistently late payers

If you have noticed that some clients have repeated behavior when it comes to payment, you can create a different term just for them. Let them know that they will follow stricter penalty policies or higher fines if they don’t pay on time. On the other hand, you can also give bonuses and rewards to those who are always on time when paying you.

Provide payment options

online payment

There are people who forget to pay because they have to personally visit the establishment just to send their payment. You should provide other options such as online payment. By then, as soon as you remind them, they can send their payments right away. The repayment scheme should also be considered. You can give them smaller invoices spread over a longer period of time so it won’t seem too heavy for them.

Just end your transaction with them

If the clients really don’t pay on time and they always become a source of headache, just remove them. There is no point in moving forward with any more transaction with them. They will keep doing the same mistakes. You would rather look for better clients out there even if they don’t ask for a lot of services from you.

Legal actions should be on the table

This is the last thing you should do in the event that you can’t really do anything to force them to pay. You don’t want to do it but you need the money to keep the business running.

Your business depends on these payments so you have to be stricter in collecting them from your clients.

Photo Attribution:

Featured and 1st image from http://cdn.pymnts.com/wp-content/uploads/2017/08/ultimate-finance-smb-late-payments.jpg

2nd image from http://tweakyourbiz.com/sales/2016/05/02/what-a-startup-ceo-needs-to-understand-about-online-payments/