Late payments are a problem for any business, and no business owner should have to deal
with them. It can cause cash flow to become problematic, and for a small business, it can
make the difference between surviving or going under.
To help this topic seem a little less daunting, we have compiled a list of top tips to help
prevent late payments, and what you can do in any instance they occur.
Provide Clear Invoices
One of the first things you can do to avoid late payments is to provide your clients with
clear, easy-to-read invoices, that show all of the important details. These details are:
A list of the goods or services you supplied.
The individual cost of each item and the total amount due.
The payment terms, such as the date the payment is needed by.
By providing clear invoices, it will be as quick and easy as possible for your customer to pay
you. If the details are shown plainly, the customer is also less likely to become confused by
anything, hopefully leading to an accurate and on-time payment being made.
Get The Necessary Information
It is important to know who you are dealing with and if they are reliable. It is always easiest
to get the information in the beginning. Though you probably don’t want to examine all of
your client’s credit histories, it is possible to use a credit reference agency to check credit
status. Another good idea is to request references from other suppliers of the business.
Once you have taken on a client, it could be wise to monitor their payment behaviour. If
anything starts to get unusual, or a client starts to get into a pattern of missing payments, it
is important to investigate this.
Make Contact If A Payment Is Late
If the date that the payment is due passes and you still haven’t received anything, get in
touch with the customer. Start off with raising a polite query, as in many cases the invoice
has simply been missed or overlooked.
This situation can be easily and quickly rectified. It’s a good idea to have a system in place for when payments are late, as that way you will know exactly what to do and when to do these things when necessary. The first interaction should always be done softly, and only escalate if and when it is required.
Offer A Range Of Payment Options
Give your clients multiple options when it comes to paying you, this will minimise the
chance of receiving late payments. Direct debits are a good option when you have regular
dealings with a particular client. Also, you should have a setup that allows you to accept
card payments and bank transfers.
Offering a range of payment options will allow your customers more flexibility, which they
will undoubtedly appreciate. This will likely encourage them to keep doing business with
you, as well as recommend you to others.
Consider Using Accounting Software
Using accounting software will provide significant benefits to your business. They can
massively help with avoiding late payments, as they have features where you can schedule
payments and send invoices automatically. They will also flag late payments.
If you are unsure about getting to grips with accounting software yourself, why not hire
an accountant? They can take care of your payments for you. Here at Suzanne Lock Business
Services, we have lots of practice in using accounting software and handling payments on
behalf of our clients, saving them time and money. If you like the sound of this, book in your
free consultation with us today. We make your business, our business.