Advice On Dealing With Customers Who Don’t Pay

The phenomenon of customers who simply won’t pay their bills has been a perennial concern for small business owners. Unfortunately, with the credit crunch tightening everyone’s cashflow, the problem is getting worse. By following a few handy tips, however, you can make sure that you stay on top of your invoices.

Anticipate The Problem

As with all business issues, the best way to ensure that you preserve your cashflow is to pre-empt the problem. You can do this by making sure that your clients are aware of your payment terms, and by designing excellent invoice monitoring systems. The former can be achieved not only by designing clear invoices with payment terms printed front and centre, but also by talking through those terms with customers when you are concluding any deal. Make sure they are left in no doubt as to what they need to pay, and when. If you have faith in your invoice monitoring systems, you will also be able to make clear that if they do not pay on time, you will immediately be following the issue up. On the positive side, you might also anticipate the problem by offering discounts to those clients who make the effort to pay early!

Don’t Be A Pushover

If, despite your clear payment terms, a client does not pay up on time, make sure that you follow through immediately. As soon as an invoice is flagged on your system as being late, make a phone call to the client. Don’t just send email, and ring at the same moment as you put the first late payment notification into the post. Explain, clearly but firmly, that the invoice is now overdue and that you will be beginning to charge interest or late payment fees. What is more, explain that until this late payment is cleared from the account, you will not be doing further business with the client. Of course, if the customer is your number one purchaser and this is a simple oversight, you should show some flexibility – but in general terms, you should make the client aware that there are serious consequences for non payment.

Do Be Reasonable

Ringing the customer directly is of course helpful in stimulating a quick payment, as no one likes to embarrassed. However, it is also useful in providing intelligence about why the payment is late, and allowing you to be flexible if necessary. If the client is having genuine cashflow problems and you already have an established relationship, don’t be afraid of being reasonable. As long as you are not a pushover, customers will respect you for treating each situation on its merits, and are more likely to provide you with repeat business in the future. Ultimately, of course, you will need to be paid. If you encounter a very difficult client, be sure to remind them that refusal to pay a legal bill is one trigger for bankruptcy proceedings. You deserve to be paid, and shouldn’t take no for an answer.

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