If someone fails to show up on time for a party or even a meeting, the consequences can often be minor. However, any business owner will be quick to agree that delinquent payments are much more than an inconvenience — they throw a huge monkey wrench into any company’s operations. Learning some tried and true ways to deal with chronically late clients can save your company’s bottom line.
Maintain Meticulous Records
Take a minute to list all of the small tasks you accomplish in a day while running your business. You’ll soon realize that the list is much longer than you may have first thought. Therefore, it’s no wonder that some important priorities fall through the cracks. Unfortunately, one of these might be keeping tabs on your invoices and which of your customers owe you money.
Even if you use a portable credit card machine to transact your customers’ payments, don’t forget the numerous capabilities contained in your point-of-sale (POS) system. One of the most often overlooked and useful is the software’s ability to help you to maintain a database of customers and outgoing invoices. Once you have entered your patrons’ names and purchase histories into the system, it’s just a matter of a few clicks to retrieve information about past-due bills.
An ounce of prevention being better than a pound of cure, and that’s definitely true when it comes to late invoices. After your customer’s invoice or e-invoice has gone out, be sure to send a reminder email. If you prefer a more personal touch, make a quick phone call. Indicate that the invoice has been sent, and politely inquire as to when the customer will be sending the payment. Sometimes that’s all it takes.
Make Your Payment Details Clear
In this fast-paced world, many people’s patience as well as their ability to concentrate are limited. Your customer might sit down with the best of intentions to pay your bill, only to become distracted and frustrated when they can’t see the bank details on your statement. Discouraged, they might then put the bill aside, resolving to deal with it later.
Therefore, it is in your best interest to do everything you can to make the payment experience as seamless as possible. That means making it very obvious how the bill is to be paid. Put all details in a conspicuous place on the invoice in a large, clear font. If possible, allow your customers the option to pay online as well, thus giving them the freedom to accomplish the task from work, home or even when they are on the road.
Keep the Lines of Communication Open
As an entrepreneur, you are doubtless aware that all businesses go through ups and downs. There are times when you may be flush with money and others when you can’t even make ends meet. The customers who owe you money also might find themselves in either of these situations.
This is where good old-fashioned one-on-one conversations can make all the difference. Whether it’s over the telephone or in person, you can learn a great deal – and get results – by having a talk with your delinquent customer. Just because their payment is late, it does not mean that they are deliberately trying to cheat you. They might be able to give you a part of what they owe now, or perhaps they can’t give you anything this month but can totally erase their debt within 90 days. Regardless of what you may learn during this dialogue, you have laid the foundations of a positive relationship that you can carry through until the issue is resolved.
Be Willing to Compromise
Although there are many patrons who can pay within a few weeks with some gentle reminding and flexibility, there are others who simply can’t give you anything for the foreseeable future. In cases such as these, reminders and late fees probably won’t yield any results. However, you can still benefit from the same frank discussion we talked about earlier.
As difficult as it may be to muster it up, empathy can go a long way in these situations. Let your customer know that you understand their dilemma and don’t expect a full payment anytime soon. However, explain that at the same time, you need to keep your cash flow moving, and even a small token payment can go a long way toward helping that happen. Agree to an amount, however fractional it might be, and ask the customer to commit to it. While it isn’t a perfect solution, it ensures that the debt is not stagnating and that the customer remains accountable to you.
Seek Outside Help
While many delinquent customers fail to pay because they forgot to do so, got sidetracked or may be going through some short-term fiscal crisis of their own, there is that small minority that nobody likes to think about: the patron who has no intention of giving you what they owe. People in this category don’t respond to flexibility, reminders or empathy. Instead, they leave you with difficult choices. You can elect to write off the debt, which would make sense if what they owe is of little consequence to you and isn’t worth the time you would take with other collection measures. You can also go through the rather costly process of taking the customer to small claims court. Finally, you have the option to hire an outside collections agency.
No matter what strategies you choose to employ when dealing with late-paying customers, there is one more cardinal rule that you should absolutely follow: Don’t do any more work for them until they have completely paid off your debt. If you continue to put yourself deeper and deeper in a financial hole, your business could suffer irreparable damage.