Here’s How to Put a Stop to Late Payments
Categorised in: Our Blog
What do the butcher, the baker, and the candlestick maker have in common? As self-made entrepreneurs, they don’t have a lot of extra time on their hands. They’re busy all hours of the day providing stellar services despite these uncertain economic times.
Like them, you have enough on your plate already. You don’t need the added stress of chasing down payments, so what can you do to ensure your customers pay on time every time?
Find the answers in the tips below. And if they don’t convince your customers to pay up, Summit A*R is here to help with professional commercial and consumer debt collection services.
Create a Clear Payment Schedule
There are many reasons why a customer may struggle to pay on time, and most of the time, it won’t be your fault.
But sometimes, you can unknowingly complicate things by sending confusing or unclear invoices. To eliminate that chance, make sure everyone is on the same page about the following details:
- How much they owe
- When it is due
- How they can pay
- What happens if they miss this date
Design your invoices so that this information is easy to find at first glance.
Missing or inaccurate information can also lead to unintentional delays, so you’ll want to streamline your billing process to eliminate errors.
Rely on Tech
When you use antiquated payment options like sending a check through the mail, you’re asking for trouble. While accepting checks may help you serve a greater number of customers, it does make you vulnerable to problems. Their payment could take too long to arrive in the mail, or their check could bounce.
For now, tech is more reliable than these time-honored traditions. Invoicing tools, bookkeeping software, and other online resources simplify your accounting process, making it easier to keep up with billing and other tasks.
Using a digital payment portal in your day-to-day billings will help your customers stay on top of their payments. You’ll receive their online payment in the time it takes to process the transaction, putting the cash in your accounts as quickly as possible.
Stay in Touch
Calling about an unpaid invoice is challenging, but it’s a necessary conversation to have with your customers. Waiting to see if they’ll pay up on their own hurts your chances of seeing that money.
For that reason, you should take a proactive approach to your accounts receivable follow-up. Send out friendly reminders before the due date, and get in touch as soon as the bill becomes delinquent to discuss the account.
While on the phone, stay calm and ask open-ended questions to learn why your customer is late. This technique allows your customer to explain their situation without accusing them of anything.
You might learn they’re late because of a simple human error, like overlooking a due date or misplacing an invoice. Or, your conversation could reveal greater financial issues are at fault. You don’t want to be distracted by these excuses, but they do help you formulate your next plan of action.
Keep in touch beyond this initial call to prove you’re serious about their debt; it also helps you follow up on any promises they make about sending full or partial payments.
Admittedly, this process consists of a lot of paperwork that takes up time. If you don’t have any to spare, consider enlisting our pre-collection services. As a national commercial collection agency, we’re ready to take over the busy-work so that you are free to focus on what really matters.
Offer Installment Plans
If your follow-up call reveals their finances are tight, consider offering a financing plan. Getting some money is better than getting no money at all, and it fosters goodwill with your customer. It shows you’re a compassionate business owner who’s willing to compromise, even when it comes to money.
Establish Early Payment Incentives
If you can afford it, consider giving a common discount called 2/10 net 30. It means you give 2 percent back on any payments made within the first ten days.
In the B2B world, even a two percent discount may incentivize a business, especially if they’re operating on small margins. That two percent could save them a lot of money and guarantee they pay you on time. That’s a win/win.
Apply Late Payment Penalties
On the flip side of the previous tip, some business owners choose to take a nod from personal loan and credit card bills by charging late fines or interest on overdue bills.
Consider this option carefully. In some cases, it can convince customers to prioritize your bills to avoid paying more. However, these penalties may fray any goodwill you have with your customers, especially if they’re struggling with the pandemic’s economic fallout.
Get Help from the Experts
When to contact a collection agency is one of the most common questions business owners have, and it’s one we answer in our FAQs about debt collection.
When these tips meet no success, it’s time to let a commercial debt collection agency step in. Our team has experience dealing with tough situations, and you can trust us to represent your business professionally.
Our “P.H.D. Philosophy” (Preserve Human Dignity) empowers us to treat your customers with compassion and dignity. This respectful approach to debt recovery ensures we’ll never use underhanded tactics that could tarnish your good name.
We understand your reputation’s role in generating new business, and we would never do anything to jeopardize that. We treat your customers with kindness to preserve your reputation and the relationships you’ve spent so long nurturing.
While you may have met a brick wall with uncooperative customers, we manage to convince them to pay what they owe you. Our principled approach to debt recovery combines with our experience negotiating all types of debtors — from sole proprietors to high-level executives.
We partner with businesses of all shapes and sizes with no minimums on accounts — whether you need help with one stubborn case or several. Let us help you get on top of unpaid accounts without being the bad guy.
Please contact us to learn more about how we’ll take you back into the black. We’re ready to get down to brass tacks about our debt collection services with you today.