Preventing Late Payments from account customers
There is no doubt that preventing late payments from account customers is an important management task.
Cash flow is the lifeblood of any small business.
Being paid later than expected can threaten business survival and causes a great deal of stress and worry.
The key question is how to mitigate against the potential problems.
Payment with order is one of the great benefits of having our own online print channels or mail-order service.
However, we need to have regular print work on account.
Particularly when trying to attract new clients.
And with so much competition it is vital that account terms are fair but strictly adhered to.
How late is late?
Legally, it is said by the law that a payment is usually classed as late after 30 days after receiving the invoice or after the product has been delivered.
However, many suppliers insist on extended terms – sometimes 60 days or even 90 days or more.
Here are just some tips on preventing late payments from account customers.
For all businesses, the terms and conditions may vary and this could mean the time taken for the client to pay may differ.
However, if it is clearly stated in your businesses terms and conditions that there is a specific time-scale that the payment needs to be made by, you can claim this even before the 30 days.
Payment terms must be made aware to your client before the invoice has been created.
5 Tips on Preventing Late Payments from account customers
- Credit check potential new clients
- Set out terms clearly with all quotations – do not rely on the terms and conditions clauses in your quotation.
- Get to know the people who are responsible for paying your invoices.
- Invoice accurately, clearly and in good time
- Have a consistent follow up system of statements, telephone calls and if necessary, warning letters.
Dealing with outstanding accounts in an appropriate way will help the long term business relationship.
Good credit control systems will make the situation much easier to manage.
Many people face the dilemma of either being too hard or being too soft towards the client.
Too hard might lose you a valuable customer, however being too soft may not get the problem solved.
Depending on the amount owed and the customer who owes it, getting your money back isn’t always a problem.
Professionalism still needs to be maintained when chasing a company up for the money they owe you.
Credit check potential new clients
One of the best ways of preventing late payments from account customers is to credit check new clients.
It is not fool-proof but it is a good first step.
Using a simple online credit checking service like Creditsafe, Experian or Dun & Bradstreet can give a certain amount of re-assurance.
Problems with late payment can be partly avoided if a business designs and follows a clear set of procedures.
Set out terms clearly with all quotations
Having a clear set of terms and conditions will help to prevent your business getting into any late payment problems.
Communicating these terms to your customer will stop them thinking late payments are acceptable.
As well as avoiding the late payments, this will also avoid confusion and misunderstanding.
However, the terms of payment must be prominently displayed on the front of the order or invoice.
Too often Terms and Conditions are too long, printed too small and are not made obvious to the client.
If the dispute goes legal judgement is often made on the clarity of your payment terms.
Invoice accurately, clearly and in good time
Charging your clients for your services promptly and efficiently means you are more likely to be paid on time.
Too many unscrupulous clients tend to avoid paying if there is an error or genuine mistake on the invoice or the invoice is sent in late.
So don’t give clients the excuse to delay.
Have a consistent follow up system of statements, telephone calls and if necessary, warning letters
A consistent approach to showing payment terms needs to be made and portrayed from your business to your client.
This will let them know when the payment needs to be made and what will happen if it isn’t paid on time.
They also need to understand how the process could escalate if they continue to avoid paying for their products/services.
Get to know the people who are responsible for paying your invoices.
When a payment is likely to be made later than expected, you should communicate with your customer and try to understand their situation.
When having reasoned with the client and made agreements for the latest payment date, you can then plan ahead for other things within your business so you don’t lose time.
If the payment still hasn’t been made by the agreed date, you can then communicate further to find out why.
Even offering the option of paying on a business credit card can help if the client has their own cash flow problems.
Ultimately, you still want a good relationship with your customer and you don’t want to lose credibility or a valuable client in the process.
Your job is always to try and offer help and support.
What can you do?
One main issues that occur in the printing business when a payment is made later than expected may be the delivery delays on future orders.
The business does not legally have to deliver the product to a client.
If the client doesn’t pay according to the agreed terms, they might lose out on getting their printing on time.
In worse case scenarios, late payment can lead to a huge debt in your business and therefore it’s best to get it solved sooner rather than later.
Once the work has been completed it becomes more difficult to recover a debt.
If the relationship has soured – proceed with legal letters and even be prepared to recover money through the Small Claims Court.
Document all correspondence and contacts – including telephone conversations.
Here’s a bit more help about how to tackle the problem of late payments… http://www.telegraph.co.uk/business/sme-library/managing-your-business/small-business-late-payment/
How will late payments impact on a small business?
Here’s how late payments can impact a business… https://dryrun.com/how-payment-delays-will-affect-your-business/
How you deal with the situation can tell people a lot about your business.
This could determine whether they wish to work with you in the future.
A lot of business owners consider prompt payment as one of their highest priorities.
Late payments can stop you planning ahead for the future.
By ensuring all payments are made on time will safe-guard your business.
Contact us for any advice or assistance or read the articles below for some more help –
Further Reading on Preventing Late Payments from account customers
Learn more about how to avoid a late payment… https://www.workspace.co.uk/community/homework/business-finance/late-payment-%E2%80%93-how-businesses-can-avoid-the-cash-f
For more information on the issues that can occur during the late payment process, read this article. http://realbusiness.co.uk/accounts-and-tax/2017/03/14/late-payments-a-cultural-issue-for-smes/