4 Ways to Stop Late Payments in 2024

Every business owner would like to think their clients will pay on time. And a lot of them will! But between Covid, the cost-of-living crisis and the general increase in costs, a lot of businesses are feeling the squeeze this year. And with Christmas right around the corner, many businesses are more aware than ever of just how much late payments could impact their cash flow. So, for 2024, we have 4 things you can do to reduce late payments, and make sure your clients can pay on time.

Identify Your Problem Customers

As the year draws to a close, now is the perfect time to sit back and reflect on your business. Just one of the things to consider is how well your customers have performed for you, and just how reliable their payments have been. There will be some who have never missed a payment, but you probably already know who those are. You’re looking for patterns of late payments. The serial late payers who always have an excuse, or who you always have to chase. Now is the time to look very hard at those customers and decide if they are really worth working with again. Compare how much time you spend chasing and managing their payments to how much they bring into your business. Is it balanced, or does it skew in one direction? If you decide that they are worth the hassle, then it’s time to come up with a plan to ensure they don’t repeat this behaviour and it doesn’t continue into 2024.

Make Standing Orders Mandatory

If you expect regular payments from clients of the same amount – for example a monthly or weekly bill, then you should be insisting on standing orders/direct debits. In today’s society you no longer need to rely on payment runs, and if clients are paying a regular bill then there is very little reason not to set up a standing order. This essentially means that you know you will get paid on time, and the client doesn’t need to worry about manually paying you. It really is a win-win for everyone. You can request your clients set these up with their bank, or you can use services like Go Cardless to do it for them. This is particularly good for service-based businesses, who often report a substantial drop in late payments after implementing this one change.

Review Your Terms and Conditions

Terms and conditions are the binding contract of any business. They are your legal fail-safe – the net you can rely on to catch you if things start to go wrong. For many businesses, the terms and conditions don’t need to be used that often. This isn’t really an issue on its own, but it can cause problems if they aren’t kept up to date. As we move into a new year, take a few minutes to review your terms and conditions. Does it all still make sense? Does it align with your business? And have you been adhering to your own terms? For example, many businesses have a clause about late payment interest charges, but very few follow through and use it. If you’re staring guiltily at the floor right now, why not make your New Year’s resolution to implement late payment charges? And if you don’t have a policy for it, make one.

Run Credit Checks

If your business centres around big purchases, or providing products on credit, then it’s always a good idea to vet your customers carefully before you extend credit. Rather than just accepting anyone, make sure you’re at least running credit checks At Debtcol, we provide both outsourced credit services and financial health checks for prospective clients, so you can be sure that they have the resources to pay you on time before you part with any products or services. It’s a small change, but it can save you a lot of money in retrieval fees.

Late payments are one of the most common issues for business owners across the country, and yet many don’t have basic systems in place to prevent them. If you’ve been struggling with late payments over the last 12 months, then it’s time to make a real change. If you’re not sure how to do that, we’re here to help. Just get in touch with one of our advisors, and we can help you put the policies you need in place to protect your business from late payments in 2024.