Even if you are seeking late payment for a loan from a friend or family member, no one enjoys chasing money that is owed to them. Your feelings of frustration can be enhanced when someone is paying you late for services or other work that you’ve already completed and submitted. As you are heavily invested in your business in both time and money, it stands to reason that it can become such a sensitive issue for you.
If you are having a tough time dealing with your aggravation, it’s certainly understandable and it is a common issue which many business owners face. After all, it’s difficult for you to pay your own bills on time if you aren’t receiving your payments for your own work on time.
The following 3 strategies can help you take a proactive approach with your clients and increase the odds that you will actually receive your payments on time.
Change your payment terms and invoice immediately. Sometimes, even the best customers need a bit of an extra incentive to pay on time. Why not change your payment terms and offer customers a small discount if they pay you up front, before the work is complete? Or you can then offer a discount if they pay on time, and let them know up front, on the invoice and in your contract that there is a small penalty for invoices that are paid late. Several bookkeeping programs allow users to send out invoices immediately, regardless of where they are, via a mobile app so make a point to send out your customer’s invoice to them as soon as the work is complete. Whether it’s in person, over the phone or on your invoices, always thank your customer for the assignment as well as for prompt payment.
Enforce your payment terms. If you haven’t already, consider switching to a cloud based accounting system that is updated automatically – this way you can see at a glance, at any given moment in time, who owes you what. As soon as the payment date has passed, follow up with a phone call and offer to waive the late fee if they will go ahead and complete the payment in the next 1 to 3 days. Make a point to remain cordial, because the idea is to get your payment while still keeping the door open to new assignments in the future.
Keep payment options open. Sometimes you can increase the likelihood that you will be paid on time by accepting a diverse range of payment options. In addition to cash, cheque and the standard Visa or MasterCard, consider adding other payment options such as other credit card merchants such as Amex, BPay and PayPal. The more payment types that you offer, the more likely you are to receive your payment on time.
Receiving your client payments on time is one of the keys to being able to increase your cash flow and establishing a good credit relationship with your own creditors. While no one likes to deal with collection agencies to help reduce late payment, there is a small portion of customers that may need this particular incentive to nudge them into paying your fee. Just know that once you take this step, your customer will likely not want to do further business with you, so always consider hiring a collection agency to collect extremely late bills as a last resort.