Handling the financial end of your business comes with a lot of details to juggle, and for many business owners, dealing with late payments is one of the most challenging. While it’s important for your cash flow to make sure your customers pay on time, it’s also crucial to make sure you don’t damage your relationship with them in the process.
You can start off on the right foot by taking a good look at your policies and contracts to make sure they’re easy to understand and taking steps to ensure that you’re sympathetic to your customers’ needs. You can also do some research on simple ways to reduce and manage debt in order to better understand what your customers are going through when they’re having trouble paying on time; Tacklingourdebt.com has several great resources and tips for paying down those big bills. Here are some steps you can take to get started:
Take preventative measures
Before you can begin creating a plan for handling late payments, it’s essential to go over your business’s policies and contracts to make sure the language is clear and that there’s no room for error or miscommunication. Ensure that every contract includes the same information, such as the date, the names of the parties involved, what the payment terms are, and when the contract expires or may be terminated. Go over the contract carefully with your customers and have them initial at each section after they read it, and make sure they have a copy of their own to take home.
Streamline your invoicing process
Another aspect of taking preventative measures is to streamline the way you handle invoices and get organized to ensure that nothing slips through the cracks. Some business owners prefer to go digital with everything and free up space in the office, while others like having physical copies of bills and other paperwork. Whatever method you choose, make sure your process is as organized as possible and that all your employees are on board with it. Utilize software that will help you stay on top of due dates and how much you’re owed so you never have to worry about your cash flow.
Reach out directly
Sometimes late payments happen no matter how well you plan. Rather than sending out an impersonal late payment notice, consider reaching out to your customer directly. It’s always possible there was a miscommunication, or that the customer simply mixed up their dates. Remind them about the amount and when it was due, and if it’s their first late payment, offer an extension to show them you’re flexible. If it’s happened before, reach out to find out if they’re having trouble getting caught up and offer possible solutions, such as a payment plan that allows them to break up the full amount into more manageable portions.
Give plenty of payment options
When customers have several ways to pay their bills, they’re more likely to pay in full on time, so make sure your business offers multiple methods. If possible, allow customers to pay efficiently online or in-store using a credit or debit card, cash, check, gift cards, and/or contactless payment methods such as Apple Pay or PayPal. The latter are great options for those who are making an effort to social distance, and they’re often pretty cost-effective for business owners as well.
Managing late payments doesn’t have to be stressful. By utilizing a few simple tools and making your processes as efficient as possible, you can get paid on time without damaging your relationships with the people you count on to keep your business going.
