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If you\u2019re running a non cash business, you rely on your customers paying what they owe once it falls due. Unfortunately, it\u2019s unlikely that every single one of your customers will pay as soon as they\u2019re supposed to. This can put real stress on your cash flow, the financial health of your business and of course you.<\/p>\n
There might be many different reasons why customers don\u2019t pay up on time. Depending on the customer you can take a variety of approaches to get as many of them to pay up as possible and improve your cash flow.<\/p>\n
How to deal with repeat offenders<\/strong><\/p>\n If a customer has a frequent tendency to pay late, you definitely shouldn\u2019t be expecting them to pay on time for their next order. Your blacklist is a list of customers who you will no longer do business with because of trouble you had receiving payment from them. Depending on the severity of the situation you may consider blacklisting repeat offenders.<\/p>\n If you don\u2019t want to put a repeat offender on the blacklist, you need to have a dedicated reminder process set up in order to make sure you get paid as quickly as possible. A reminder should be sent out a week before the payment becomes due, on the day that it falls due and each week thereafter.<\/p>\n Customers that disappear without a trace<\/strong><\/p>\n This is your worst nightmare from a cash flow perspective. You\u2019ve carried out the services or provided the products asked for by a customer, incurring operating costs, and they disappear without a trace before they pay you.<\/p>\n They won\u2019t respond to any attempts to make contact with them and it\u2019s reasonable to assume that they won\u2019t be paying you, whether or not they intended to from the start. Your blacklist should be updated with their details straight away.<\/p>\n Using a debt collection agency or taking legal proceedings against the customer are actions you can take in order to eventually get the money they owe you. Take care that these proceedings don\u2019t end up costing you more than the amount you are owed. Time considerations also need to be taken into account, especially for any legal proceedings. You may get your money but what amount of time will you spend away from your business, and is it worth it?<\/p>\n If you have resigned yourself to not receiving that payment, you will have to write off the corresponding invoice in your accounting software. It\u2019s one of the more frustrating things you\u2019ll have to do in business but hopefully it\u2019s a rarity.<\/p>\n Companies that forget your payment details<\/strong><\/p>\n You might have experienced this before, you call to ask about when your invoice will be paid and the response is that they\u2019ll pay it immediately but they don\u2019t know what your payment details are. This should not be an excuse that you allow your customers to have.<\/p>\n When you issue an invoice, include your payment details on it. This means that whenever your customer gets around to processing your invoice, your payment details will be immediately available to them.<\/p>\n