Your business cannot survive, much less thrive, if you don’t get paid by your customers and clients. If you are working with a tight budget, even one habitually late customer can mean the difference between growing and struggling.
At the same time, you don’t want to damage your relationships with valuable customers. So, what do you do if you have a customer who is chronically late in paying their invoices but that otherwise helps your company move in the right direction? We have listed some practical tips below!
One way to make sure you stay on top of invoices and prevent late payments is to hire people to help your business. For instance, an accountant or bookkeeper can go a long way in collecting payments and helping your company maintain healthy financial management in many other ways.
To find qualified professionals, ask around your professional network for referrals. If no recommendations come your way, you have a couple of options:
Working with a recruiting agency means that you would not have to commit the time and energy to evaluate the profiles of multiple candidates to see which candidates can provide the skills you need within your budget. You can use the time you save to focus on other aspects of running your business.
Make Your Expectations Clear
Sometimes late-paying customers do not understand the expectations of the company. You want to avoid this miscommunication and make your expectations apparent. Before providing services to any customer, make sure they agree on how, what, and when they will pay. An example of this would be communicating that you wish to get paid through direct deposit or PayPal within a specific timeframe.
Request Upfront Payments
Another option is to request that your customers pay you upfront for your services. If this sounds strange, understand that more and more freelancers and agencies are employing this technique to avoid late payments. You receive either full payment or partial payment before you begin work for the customer, which means that you have the responsibility to deliver and eliminate the need to send an invoice after the fact.
Tailor Your Invoice Schedule
If you deal with consistent late payments from a particular customer, but they are still paying you (eventually), consider asking if you can customize your invoicing schedule. This could mean that you divide their payments into installments. For instance, if you sell a $1,800 service to a customer, you could send them three invoices for $600 over three months. Paying more frequent, smaller invoices could put your customer in a better position to pay on time.
Use Email and Text Messaging
Finally, one of the most practical ways to prevent late payments in the future is to send follow-up emails a few days before each due date. You can also send a professional, friendly email reminding your customer to pay if the due date comes and goes without payment. Many times a customer allows an invoice to slip through the cracks. With that in mind, wait at least one week after the due date to send a follow-up email.
Customer relationships are critical when it comes to running a business. But at the end of the day, you will not be able to survive or grow without getting paid for your work. If you are consistently dealing with late payments from customers, consider the tips above. With any strategy you use, however, be sure to maintain a friendly and appreciative tone to keep your customer relationships healthy.
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Article by guest writer Eleanor Wyatt.