When you own a business, it’s an unfortunate reality that you may have customers who have difficulty paying for your goods or services on time.
This can have a huge impact on the success of your business, affecting your cash flow and can lead to you spending time chasing up outstanding invoices instead of being able to focus on the day-to-day of your business.
While some delinquent customers are bad news for your business, sometimes even your favourite or best customers run into difficulty when it comes to paying their invoices. So, what do you do when a good customer isn’t paying on time? How can you effectively collect your overdue payments without damaging the relationship?
Keep reading to learn some of the ways you can manage this situation.
Tips for collecting outstanding payments from good customers
Here are some our expert tips to make collecting overdue accounts easier.
Find out why they aren’t paying on time
Sometimes one of the simplest things you can do is ask your customer why they aren’t paying their overdue debt. They may have forgotten, or perhaps they are having financial difficulties. Whatever the reason, taking the steps to understand the reason behind their late payments may allow you to reach a resolution easily and efficiently.
Monitor their payment habits
If your customer only pays their invoice late occasionally, monitor their payment habits over the course of a few months. If there seems to be a pattern, you may be able to discuss this with them and potentially work out new payment plans that will be more manageable for them and will allow you to plan ahead effectively.
Send reminders
Like we said earlier, sometimes the reason a customer doesn’t pay on time is because it slips their mind. Our lives are busier than ever, and only getting busier. To mitigate this you can set up reminders in a variety of ways. You can send this in paper invoices, emails, or even text messages close to when the payment is due. This can be highly effective in prompting customers to pay.
Set up a follow up procedure
If an invoice date passes without payment, consider setting up a follow up procedure, this could be in the form of a letter, email, text message, or even a simple phone call to remind them. This can be particularly effective if they have simply lost or forgotten the invoice.
Set up a Terms and Conditions Agreement
Before you engage in any business arrangement with a customer, you need a terms and conditions document that outlines the terms of doing business with you. This should include information about the goods or services provided, as well as information about payment terms. The terms of this document should be understood and agreed to by your customers. That way if they have difficulties you have this agreement to back you up.
You can learn more about terms and conditions documents here.
Check potential client’s credit before engaging in any business agreement
A credit check of a potential client is one of the most cost effective and time saving things you can do for your business. A credit check will be able to provide you with information about a customer’s payment habits and help point out any red flags!
Focus on finding a solution, rather than focusing solely on the problem
Money troubles can be embarrassing and difficult to discuss. When you are discussing missed invoices with your delinquent client, be patient, remain clam, and focus on finding a solution to the problem. Dwelling on the fact they haven’t paid the invoice can cause them to shut down and ignore the issue even more. If you work with them to attempt to find a solution this can often be an effective way to recover this money.
Hire a professional
As we mentioned before, money difficulties can be difficult to talk about, whether you’re the one owed money or owning the money. Sometimes, one of the best ways you can recover your debts and still maintain a great relationship with your customer is by engaging with a professional debt collection service.
Debt collection is a skill that takes a long time to master. Many collection agencies have experience in a wide range of industries and have lots of different resources and debt collection techniques that make recovering debts a breeze.
Work with JMA to recover your debts
JMA Credit Control is highly experienced at recovering overdue accounts for small businesses all over Australia. With professionalism and discretion, our team can help you recover your debts and improve cash flow today.
If you need help recovering overdue payments call us on 1300 588 728 for a free consultation. We have offices in Melbourne, Sydney & Brisbane and offer our services across the country.
Call JMA today.
