The Four Top Ways to Help Your Business Avoid Issues with Late Payments

 If you have a small or medium-sized business enterprise, it is essential for you to have your bills and invoices settled on time. However, this is easier said than done, especially if you have to deal with customers who are constantly paying late (or not even paying at all). If you have to chase after your clients for payment, this can also place a lot of stress on you and take up a lot of your precious time and resources. So in order to avoid any issues with late payments, below are some effective measures you can take:

1. Contract first

Before you even begin any kind of transaction with a client, you have to set forth a contract first. If you do not have an official written document or agreement which gives details on the type of work you will be doing for the client, how you will do it, and when you will receive payment, clients can easily make their own conclusions and assumptions and even raise a dispute once you have sent them an invoice. In this contract or agreement, you should not forget to include information on what the client can do if there is any disagreement. In order to avoid pesky misunderstandings later on, just create a contract, show it to your client, and have them agree to it (and sign it) before you provide them with any goods or services.

2. The necessity of deposits – especially with new clients

 If you are planning to work with a completely new customer, this can entail a certain amount of risk. So to avoid this risk, what you can do is ask them for a deposit upfront so you can eliminate the chance of late payments or even disputes.

Apart from minimising risk, asking for a deposit also helps you establish a closer relationship with your customers because it lets them know that you are a professional and you are running a business that sets clear expectations and boundaries. Asking for a deposit will also increase the chances of your customer pushing through with the project until the end because they have already made an investment, so to speak.

3.Prompt invoicing always works

If you want to avoid late payments from your customers, there is yet another thing you can do: send your invoices early. You may think that this is already a given for most businesses, but, sadly, some businesses do leave sending out their invoices until the last minute. By being prompt with sending out your invoices, you are giving your clients the time to look over their invoices and settle their bills even before the due date. Your clients will also feel the urgency of settling their account on time because you have shown that you have prioritised their invoice.

4.Setting penalties

One other thing you can do to avoid issues with late payments is to set penalties. When you send your clients their invoice, include a penalty ‘section’ where they can clearly see what might happen if they do not settle their account on time. You can issue a flat fine or fee which can be activated as soon as the deadline arrives, or you can also charge your customers a certain amount of interest for every additional week or month that their payments aren’t settled.

When it comes to avoiding late payments, you have to be firm and straightforward as well as clear and concise. But if you are having difficulties with your cashflow due to previous late payments, you should get the help you need from financing experts offering factoring, invoice discounting, and other financing services such as ultimatefinance.co.uk.

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

http://www.freedigitalphotos.net/images/Other_business_conce_g200-Final_Notice_Stamp_p95050.html