Is There a Way of Preventing Late Payments?

No matter what kind of business you do or what you sell, we guarantee you’ve had to chase a customer for payment at least once. It’s almost a requirement for being in business. But it shouldn’t be – in an ideal world all customers would pay their invoices on time or even early, and your cash flow would look positive all the time. Sadly that isn’t the case, and many businesses have to routinely chase customers for payment. And while you can’t control what your customers do (or don’t do), there are some things you can do to prevent your customers from paying late, so that your late payment rate stays low, and your cash flow stays healthy.

Do Your Research

Before they choose to buy from you, your customers will have probably done a fair amount of research on you. Deciding if you offer the right solution at the right price, and if they like the feel of your brand and the way you handle your customers. But you get to do research too, to make sure they are the right customer for you. This can include things like background checks, director searches and even just asking basic questions before you agree to work with them. By being a little more selective of who you accept as customers, you can spot a lot of the red flags before you’ve provided anything, and can either choose to put extra protections in place (such as payment in advance), or decide that they are too much of a risk to work with at all.

Make Your Payment Terms Crystal Clear

We really can’t stress this enough. When we help clients with late payments, one of the main excuses their customers give is that they weren’t sure on the payment details. When things were due, how much was due, or how to pay. And while this isn’t really an excuse, if you haven’t made these things clear up front it can cause delays, and may even give them some wiggle room in court if you end up taking it that far. So make your payment terms crystal clear up front, and make them easily available at multiple points of customer contact. This includes things like links in email signatures and on your website, having all of the payments details on your invoices, and having customers sign a copy of your terms of service (which should include your payment terms) up front.

Automate Your Chasing Process

If you have the ability to, automating the payment chasing process can have a huge impact on the number of late payments your business gets. We are all human, and not every invoice is going to be chased the day it goes overdue. But if you want to be efficient, automated invoice chasing is the perfect solution. Most invoice software will have this function, and you can set it to send automated reminders when a payment is coming up to due, the day it’s due, and when it goes overdue as well. You can even set them to send an automated ‘thank you’ once payment has been received. It may take a cycle of this to sink in with some customers, but many would rather just pay you than deal with all of those emails. Plus, it catches some of those business owners who want to pay you but genuinely forget, so you can preserve your relationships with them.

At Debtcol, we do more than just chase debts for our clients. We also provide proactive advice and processes to help you avoid more late payments in the future. Our team are on hand to talk through your current processes, make suggested improvements and even help you implement them, so that your clients are more likely to pay on time, every time moving forwards. If you would like more information, just get in touch with the team today to book your free consultation. And remember, late payments don’t have to be a fact of life for your business!