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Running a small service company has always been a dream come true, especially when your clients pay their invoices on time. When building up your business from the startup stage, you may rely on a few stable clients to make their payment deadlines as they are giving you the necessary working capital. These faithful clients bring a smile to your face every time you mark their payments in your bookkeeping software.

Yet, in time, one or two clients may begin missing payment dates. It may start as just one late payment every few months as you aren’t too concerned about it. You may know this is a slow sales season for the client. And really, they always have been good for your business so you are willing to give them a little leeway.

The dreaded client “drift”

Client drift can happen to the best of your customers and clients. While it might seem gracious of you to give some leeway to these loyal clients, you are setting yourself up for accounting headaches in the near future. There may come a time when the weeks, and then months, go by without a payment. It may become hard to get in touch with their accounting department, and when you do they give a vague answer that the payment will be made soon.

There may be several reasons for client drift. The client’s operations may have recently changed as it is affecting their payment schedule. They may be having a slow sales season, or their clients may not be paying on time. Another issue may be that the client has problems with the payment schedule in your contract.

There may also be problems at your end with invoicing the client. Unclear invoice statements, problems with delivery of invoices, and difficulty with accepting payments into your business can cause confusion with clients. So never assume that all the invoicing problems are on the client’s accounting end.

How to avoid client drift

1. Open the lines of communication: The moment that your clients begin to drift out of their contract terms, get in touch with them. Figure out the reason and try to resolve the problem so that both parties are happy with the outcome.

2. Review invoicing statements: Ensure all information on the invoice is accurate and you have clear descriptions for each cost. Make sure every expense is included, such as VAT amounts, to eliminate confusion or stalling tactics.

3. Eliminate time lag for sent invoices: Check that there is no lag from the time that the invoice is sent to the client to the date that you expect payment. It could be that the client is receiving the statement late. Accounting software with invoicing and emailing tools can eliminate time lags so clients have the opportunity to make timely payments.

4. Keep up with your account remediation: Simply don’t wait it out and see if the client pays eventually. Have clear payment dates and grace periods outlined in your contract and enforce them. This tactic can stop certain clients from taking advantage of your business.

Your small business relies on structured invoicing procedures to ensure that there is steady cash flow. Eliminating client drift and getting payments back on track will show your clients that you have strong and professional operations.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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