Every entrepreneur dreams that payments are made on time and cash flow is sufficient and accurate. However, the unfortunate reality is that this dream is pretty rare in today's market world. A majority of business owners struggle with following up on unpaid invoices from clients.
Collecting overdue payments can become very frustrating, which is why you need to be careful with your approach methods. A wrong move might hurt the relationship you have with your clients, making you lose them and hurt your business in the long run.
The ultimate goal is getting paid and still securing future business deals. For this, you need to adopt a strategy that'll get you paid and still maintain valuable clients for your business. Leshinsky Finance explains how.
Set terms early in the relationship
To avoid any misunderstandings, it's important that you communicate your payment policies to the buyer early on in the business relationship. You can create a clear, professional-looking invoice using a free invoice template that details the business policies regarding payments. For instance, stating that 50% of the money should be paid upfront and the rest within 2 weeks after product delivery.
Additional Information like a delayed payment fee is also a good idea. 5% fines are common but you can put a fine which you are comfortable with.
Use a payment processing software
It's inevitable that you forget to send out invoices on time, it also requires a lot of work when you send them manually and may cause a lot of errors.
With payment processing software, you can also schedule the time at which you'd like your invoices sent. Invoices sent immediately after a job is completed are very effective. You are more likely to be paid on time if invoices are released on time.
Using payment processing software is a great way to avoid any unforeseeable inconveniences. It will become easier for your business to get paid, and is also a great way of accepting diverse payment options. Providing convenience to your clients will see that all payments are made on time.
You can also add a payment portal on your website, which is another optimal convenience. When including this feature, set up secure channels so your customers have assurance that their personal information remains secure.
Send a polite reminder
Sending reminders is effective to notify your clients about overdue payments. It's normal that they may have forgotten about making the transaction. Send a friendly email immediately after the due date, remind them about your company's payment policies, what amount is due, payment methods, and any fines or fees as a result of the delay.
Ask for a reason
This is mostly applicable to regular clients, late payments might have other reasons, so ask. If the case is legitimate, working out payment solutions with your client is a creative move to maintain the business relationship. At the end of the day, late payment is better than none.
Keep a record of all communication
Ensure that you keep a record of all communication in case of anything. In the case where legal enforcement becomes necessary to obtain payments, email, phone calls, and contract records will be necessary. Any or all attempts to request payments must also be recorded.
Pause or stop any business
The bottom line is, a company cannot run without funds and payments from clients. When a client makes it a habit to delay any payments, and ignore all payment requests from the company, then stopping any businesses from the client is advised.
It's difficult to give up on a customer, but sometimes it's necessary for the benefit of the business.
Don't shy away from contacting them
Requesting late payments can become a daunting task, especially when you don't want to seem rude. Unfortunately, it's necessary to ensure that there's cash flow for your business. Regular reminders to the client are effective, however, make sure that these reminders are polite.
Conclusion
Prompt payments are vital for any business, ensure that you have everything in order in case of delayed payments from your clients. In many situations, communication is key, communicate with your client by sending reminders and invoices. Make sure you are always polite and that you provide convenient payment methods for your clients.
Leshinsky Finance understands the importance of wise strategic and financial planning during all the phases of the business cycle contemplation to maturation and possibly sale of the business. Reach out today to set up a free consultation.
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