Top 3 Mistakes That Cost Business Owners: How To Avoid Late Payments
Updated: Mar 30
by Amy Collett | Jan 7, 2022
How often do you receive late payments when it comes to your business? If you fear the impact late payments may have on your company, then you need to start thinking about how you can incentivize your clients to pay on time. Sometimes, late fees are out of a client’s hands, but other times, you could offer more options to ensure payment. To learn more about how to avoid mistakes, check out the guide below from AAH Enterprise.
Offering Goods and Services Based on Good Faith
While it may be true that most clients do not want to steal from you, you cannot expect all of your customers to act appropriately and pay you on time. To avoid losing money or fighting for your payment, you may want to consider charging before you provide the service. If it makes more sense to charge after the finished product, you may ask for a deposit instead.
All transactions need to have a legal contract in place. These need to agree on the quantity, price per unit, and total price. In addition, there should be rules for how to handle payment, particularly late payments.
Agree to all payment terms in advance. If you want clients to pay faster, you may want to offer discounts or other promotions for those who pay early or on time. When you have discounts or waive late fees on a situational basis, customers appreciate it. One of the main features of good customer service is your ability to empathize with your clients.
Not Providing Correct or Consistent Invoices
When you do not provide correct and prompt invoices, you may be setting yourself up to lose payments. The sooner the billing department sends out invoices, the sooner you will be compensated. If you create your invoices, you can use various programs and templates to create your invoice.
If you want to smooth out the invoicing process, you may consider other software, like a balance API. Plaid Balance lets you verify whether the customers or clients have the funds to pay for your services or products. When you use the service, you worry less about whether you will receive money and whether your customer can handle the payments without overage fees.
While you should never harass your client after the bill becomes due, you can send regular invoices and a letter that he or she did not pay the bill. Always be polite and never be too harsh. Extreme methods of debt collection tend to push clients away.
Refusing To Use Technology for Efficiency
There are various ways you can accept payment from your client. If you do not allow your client multiple options, you could miss out on receiving on-time payments. For instance, if you have clients in various demographics, one may only use traditional payment methods, while the other uses credit cards exclusively. Convenience is essential to clients and the more convenient you make the process, the more likely you are to retain client loyalty. Studies show a direct correlation between increased revenue and offering different payment options.
Knowing how to empathize with your client can go a long way. When you understand why people make late payments and how you can achieve payment, you are less likely to deal with people being late. Additionally, you can keep clients loyal when you handle the late payments correctly.