Preventing Late Payments: 6 Ways to Make It Easier on Your Business and Your Customers
Updated: 5 days ago
Companies know that doing business involves some risk and that customers who fall behind on their bills can have a negative impact on the business's operations. Getting paid late by clients isn't something you can avoid 100% of the time, but you can take the following steps presented by Concept Marketing Group to reduce late payments without losing the customer.
1. Make Payment Terms Clear
When you first establish a business relationship with a customer, be sure to clearly state the terms of payment. This includes the due date, late payment fees, and how often the customer can expect to be billed. To avoid any confusion, it’s also helpful to send out reminders to clients before the bill's due date.
2. Send Regular Reminders
It's a good idea to send an email or letter three days before the bill is due, reminding clients of what they owe and when payment is expected. Sending reminders not only gets their attention but also cuts down on last-minute stress. Be mindful of the file type for digital invoices.
Even if you’re using a compressed file format, such as PDF, it's possible the file's formatting may not be properly maintained. If this is the case with your invoices, choose PDF compressor software that keeps the layout and elements intact while reducing the size, making it easier to send files promptly.
3. Offer Multiple Payment Options
For paying invoices, everyone's different. Some may prefer to pay online via credit card or bank transfer, while others may want to send a check in the mail. Offering multiple payment options makes it easier for customers to pay you what they owe. This step also reduces the risk of losing a client because they don't utilize the preferred payment method.
4. Offer Flexible Payment Plans
While your priority is receiving timely payment, also consider that your client’s financial situation may change. If that happens, offer them the option of extending their due date or breaking up the payment into installments. This shows that you understand and want to maintain the relationship, even if some bumps come up along the way.
5. Give Customers a Discount for On-Time Payments
Giving clients a little incentive to pay on time can benefit both parties. Offering a small discount for payments made within a specific time frame, such as 10 days after receiving the invoice, is an easy way to encourage customers to pay on time. Be sure to have the terms of this discount on your invoice to avoid any misunderstandings or confusion about what you're offering.
6. Use Technology to Improve Your Billing System
Invoicing and payment processes can be easier for your business if you use tech that streamlines the process. For example, using an income verification API ensures you can safely access any critical data. Plaid's API, for example, supplies a secure connection to link bank accounts or debt information without compromising customer privacy.
Receive Payments on Time
You can collect payments timely without losing customers by sending out reminders, having clear terms, and using technology to boost your accounts receivables.