Handle Late Customer Payments Without Driving Customers Away
There’s likely to come a time when a customer falls behind a payment due date. As a business owner, you rely on on-time payments to keep your doors open, but you also rely on customers to do the same. How do you collect payments without harming your relationships with your customers? Here are some tips from Capital for Business that are sure to make handling late customer payments a lot easier.
You can only deal with late payments if you know that they are past due. If you don’t already do so, ZenBusiness recommends implementing payment collection and invoicing software that keeps up with payment dates and late payments so you don’t have to. The right technology makes it more convenient for you to get paid on time, and it offers your customers several ways to pay. Payment methods experts recommend include bitcoin, money orders, bartering, and automatic clearing house payments.
Create a Payment Policy
Establish a company payment policy for individual customers or all your customers, whichever makes the most sense. For instance, do you prefer sending paper or electronic statements, or would you rather call late-paying customers? Decide how much of a late fee to charge and whether you want to reserve the fee for specific customers or situations.
Use Payment Reminders
Sometimes, all it takes for customers to pay their bills is a friendly reminder. Create a standard payment reminder you send immediately after a due date passes without receiving payment. On the reminder, let the person know about the past-due payment, the amount owed, and your approved payment methods. Attaching a copy of the original invoice is also a good idea.
Stop Doing Business with Non-Paying Customers
If you’re dealing with a late-paying client, you may have no choice but to stop offering your services or products until the person clears all outstanding debts. Send the client a letter to inform her or him of your decision and the reason you made it. The person’s need to continue with a project may be all the incentive needed to catch up with payments and protect your relationship. Another reason to stop working with nonpaying clients is so you aren’t wasting time, resources, or money on someone who doesn’t pay.
Understand Which Tactics to Take
To avoid diminishing customer loyalty while collecting outstanding payments, you must know how to deal courteously with the matter. You don’t want to come across as harassing or make customers feel like you’re pressuring them. Instead, focus on remaining calm and doing what you can to work with your customers rather than against them.
Keep the Lines of Communication Open
While attempting to collect late payments, maintain communication with customers. People may be late to pay because they don’t understand your company’s terms. Answering questions and helping them comprehend your terms could get you your payment and preserve your relationships.
Be Proactive About Late Payments
If you have one late-paying customer, you can bet you’ll have another. Implement ways to prevent future late payments. For instance, offer early-payment discounts, and be sure to include them in your payment terms and on invoices so customers know about them. You could also ask for up-front payments or staggered payments for long-term projects. If possible, check your clients’ or customers’ backgrounds before doing business with them so you know whether they have a history of late payments.
How to Handle Late Customer Payments
Late payments may severely inhibit your business’s success and your business strategy. Luckily, these tips can help you overcome financial hurdles while boosting the loyalty of your good customers.
Capital for Business serves the small business community nationwide and in Canada by offering a large range of financial services to our customers.