Should You Give Up, Or Should You Just Keep Chasing Payments?
Controlling cash flow as a small business isn’t always simple, but if you are the type of business owner who knows the worth of a good accounting team, you’re going to go far with your company. Every single day, small businesses have to deal with late payments from their customers and it’s not something that is fair for anyone to cope with. Understanding the impact that late payments can have on your business is the best way that you can decide how to deal with them.
Everyone in the business world wants to get paid quicker but hold onto their cash longer. There are so many global uncertainties when it comes to finances and knowing how to deal with late (and non!) payments will get you much further. Here are four ways you can deal with invoices that get paid later than arranged.
Chase Immediately. Late payments can really mess up your cash flow. If you have provided a service or a product, you deserve to be paid for that service straight away. The difficulty is how to do this while balancing your client relationships so that you don’t end up accidentally burning bridges with them. If you are dealing with a customer who normally pays on time, speak to them right away to find out what is happening; usually things can be cleared up straight away. If you are dealing with a customer who is a repeat offender, you need to decide whether you can continue your professional relationship with them. You can, of course, get working capital loans for small businesses to bridge the gap between invoice and payday, but you shouldn’t have to do that. Immediately chasing your late invoice is the way to get it resolved as quickly as possible.
Invoice On Time. The whole finance process is a precarious one and can be messed up with the slightest mistake. Improper invoices with the wrong information can delay the payment process. Ensure you are adhering to the contractual terms agreed and invoice at the right time so that you can be paid on time.
Agree On Terms. All payments should be agreed on contract signing so that you don’t actually have an issue receiving payments. Make sure that you can manage the payment terms that you agree on. There’s no point in your business agreeing on a 90-day payment term if it is not feasible for the survival of your business.
Know Your Customers. It’s easy to misunderstand a customer, so make sure you have a good relationship with them from the get-go. If you have a good relationship with them, payments can be sorted out far faster and with little upset.
No one wants to chase customers and clients across the industry for payment, but then if clients paid on time you wouldn’t have to chase. Don’t feel bad for chasing for what you are due; it’s business, after all. The key is to handle it sensitively and success will follow.