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Must-Know Tips for Navigating Late Payments and Protecting Customer Relationships.
You love having your own business, but you could do without the occasional customer who misses a payment. As an entrepreneur, you depend on on-time revenues to stay afloat, yet you must also manage your customer relationships with care. It helps to learn how to collect late payments without making customers upset or ruining a professional reputation.
Use Invoicing and Payment Software
Rather than manually handle payments and invoices, business owners can use reputable payment and invoicing software. According to professionals, some benefits of using billing software include creating quick invoices, managing business operations easily, and improving brand identity. Invoicing software also lets you accept various payment options to meet your customers where they are regarding their ability to pay. Software that can authenticate bank account information can increase your payment options. With more payment options, you could increase your chances of receiving prompt compensation.
Use Contracts to Set Clear Payment Expectations
It often helps to get in front of payment issues rather than wait for them to crop up. If your customers sign a contract before you work together, use the document to establish your payment expectations. Specific details to note include due dates and details and late payment conditions and terms. Even if a customer does not pay you on time, you at least allow her or him to understand your expectations and get on the same page.
Offer Incentives for Early Payments
One great way to encourage on-time payments and protect your customer relationships is to incentivize early payments. For instance, you could offer a 2% discount for paying an invoice within 20 days rather than within 30 days. Offering an incentive could also safeguard your supply chain, boost liquidity and keep your stock moving at a steady pace.
Create a Process for Tracking and Chasing Payments
If you use invoicing software, it could make it easy to implement a process for tracking and chasing late bills. Your process could include automated past-due reminders, so you have one less thing to add to your to-do list. You could also establish follow-up points for when invoices remain unpaid after a specific number of days, such as three days overdue and one week overdue.
Make It Quick and Painless for Customers to Pay
One reason for late payments could be customers feel your payment options make it cumbersome for them to settle their accounts. Consider asking your customers their preferred methods for paying their bills, so you may implement them and show your customers you listen to them.
Create a Script in Advance
Rather than communicate off the cuff, create a script for contacting individuals about outstanding payments. The right words and your tone of voice could change a person’s mind for the better or the worse. Another reason to use a script is so you keep your goals and intentions in mind, no matter what the other person says.
Start with a warm tone and a gentle reminder of the past-due amount. If you must escalate your efforts, refer to the contract terms and what happens if the invoice remains unpaid. Endeavor to remain professional and polite, as hostility on either person’s part only worsens the situation.
You must move carefully when navigating late payments, and having the right tips helps you understand which moves to make. By learning how to handle the situation, you make yourself a better and more understanding business owner.
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"As a one-on-one financial coach, Ted James has seen and helped it all. He created his site, Ted Knows Money, to share money tips and help people get complete control of their finances."
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