Business owners and managers are keenly aware of how important it is for clients to pay on time because if they don’t, cash flow could suffer, and we all know that cash flow is the lifeblood of any business. But managing your cash flow – and ensuring you have enough – also entails proper credit control. So your business’ credit control processes involve making sure your customers pay you on time, and as a result, you should have better cash flow.
But no client is perfect, and some may give you problems with late payments. Late payments can end up being a big issue if you cannot take matters into your own hands and deal with them head-on. A single late payment may not make much of a difference. Still, if you let one too many payments fall late without taking necessary action, it will add up eventually, and you may find yourself facing insolvency. It doesn’t have to come to this, however. Here’s how you can adequately minimise and avoid late payments from clients.
- Do the proper research
Whilst you can do several things to chase late payments, including giving your clients a ring or sending a message, you can avoid all this if you do the proper research first. It means checking your clients’ backgrounds and credit ratings, no matter how exciting or stable they may seem. It pays to do due diligence on your clients, as GSM Accountants in central London assert. You should also check out their business figures and the condition and status of their finances, so you will know if they have faced problems in the past.
- Confirm which terms work best for you
If you are a startup and would like to please your clients, you can do so in many ways – but this doesn’t include being vague about your payment terms. Don’t be afraid to be firm and confirm your payment terms from the beginning. Your clients should then know what they need to do from the onset. Make sure the terms you agree to will work for your schedule and goals.
- Assess your business’ credit control
Credit control is a combination of the right organisation and the right knowledge regarding customers. That said, only extend credit to those clients who will be able to pay – and on time. Assess each client and establish those who have a good record – and those who do not.
- Be mindful of every invoice
Another thing you can do to avoid or minimise late payments is to be mindful of every invoice. Once you have sent out an invoice, follow up on it after a few days. Send it off as early as possible before the deadline. As soon as a client is already late or past the payment deadline, chase it – call them, send them a message, or even drop by. You should always be professional and polite, but don’t hesitate to be as clear and firm as can be.
- Come up with a contingency plan
All businesses will deal with late payments at one time or another, but whilst this is sometimes inevitable, it also pays to have a contingency plan. You should, for instance, list down your top priorities, particularly what you have to protect as well as maintain so you can stay in business.