You may have heard it all before – to avoid late payments (and other issues that stem from it, such as a lack of cash or a weak cashflow), you should make sure your clients understand your payment terms from the start and make sure your invoices include all the relevant details so you can eliminate the risk of disputes.
But, needless to say, if late payments are an even bigger issue for you now than ever, there are certain additional things you can do to tackle the issue once and for all. This not only includes sending your invoices way before the due date, offering discounts for early payments, and the solutions mentioned above – this also includes keeping track of your invoices, protecting yourself against a bad debt, and knowing the proper way of asking for or collecting payment.
Keep track of your invoices, especially those from customers who regularly pay late
One of the alternative things you can do to obliterate late payments is to keep track of all your invoices – especially from those customers who have a history of paying late. This means making sure you have confirmed that they have been received by your debtors. What you can do to augment the process is to contact your customer before the date the payment is due just to make certain that there are no questions or disputes and that the payment will still come through. But, if your debtor’s payment has still not arrived on the due date, contact them again on the day itself and remind them about the consequences they can face for late payment.
To help you keep better track of your clients and their debts, make use of software specially-designed for financial management which can help you manage your debtors’ accounts and which you can also use as a central system through which you can make and send out invoices electronically. Additionally, when choosing software, choose one that can list as well as track any invoices that are already past the payment date and that can also do an assessment of which customers regularly pay late.
Protect yourself from a bad debt
If late payments have become an issue that is really affecting your business cashflow, you can protect yourself from these kinds of bad debts by getting trade insurance coverage. This is especially useful if a customer has already gone insolvent and can no longer pay you for your goods or services.
Know how to properly ask for – or chase – payments
If you have done all that you can to get paid – including contacting your customer numerous times – to no avail, then you have no other recourse but to use other modes of collecting payment. The first thing you can do is charge your customer for late payment. You have the right to do this because there is a specific law or legislation that allows businesses to charge penalties for late payment or to charge their customers for the costs of debt recovery. If this method still does not work, then you can ask for help from a debt collection agency. If this does not work, either, then you can think about taking the case to court. This, however, is considered an extreme and worst case scenario as it may end up costing you money and time in the end.
If you are tired of dealing with late payments and have had your cashflow affected more than a few times, you can make use of the cashflow solutions offered by Ultimate Finance (learn more by visiting www.ultimatefinance.co.uk), which include invoice discounting, factoring, asset finance, construction finance, and transport finance, among others.