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How to deal with late payments effectively

01/09/2017

Are you suffering because your clients don’t pay their bills on time? Don’t let this happen to you.

Having a steady cash flow is a must for any startup as it keeps your business running and in the long run, it’s going to become a healthy base for client/customer management. Whether it’s a startup or an established small business, there are always some folks who forget to pay on time.  When I read the article Veronica Sandberg wrote I realised the tips she recommends are easy to follow to ensure the lack of cashflow won’t kill your businesses

When you start a customer relationship it’s important to set “ground rules” about how you and the customer will behave. Well, being a startup you will certainly be not in a situation to have many, but having a customer base is most important for you, so you need to deal with this situation in a gentle way.

Make Sure That “The not received invoice” Is Received:

Many debtors use this excuse in order to stall things a little bit. In case they say that they did not receive the invoice, the best thing to do is to send them through courier with a proper receipt.

Make Use of Phone: You should also call the department that handles these procedures in order to see if the invoice was really sent or not. This will put a little bit of positive pressure on the client so that he knows he has to pay the dues until a certain date.

Using the Electronic Medium for Invoicing: Send your invoices electronically because in this way you do not waste any time. If you manage electronic invoices, make sure to resend an invoice after two or three days to remind the client that they have to pay on a certain date.

Adding Late Payment Fees: Adding a late payment penalty work like a charm, but make sure to update your terms before applying for any late payments!

Upgrading Payment Methods: One of the great excuses is that the client has sent a cheque, but it never got to the destination. A simple solution is to eliminate this method of payment altogether. If you still want to practice it, you should ask them about further details so that you can contact your financial institution.

Depending upon your business model you may bring further upgrades in the payment processing methods; the above guidelines are devised keeping a generic late payments issue in mind!