One of small business owners’ least enjoyable jobs is having to pester customers to pay them. Some require multiple follow-ups before they eventually pay. However, late payments can cause serious issues with your cash flow.
Getting customers to pay what they owe you without using strong-arm tactics that can ruin what is otherwise a profitable relationship for you is a balancing act. Let’s look at some ways to help you get paid what you are owed on time (and, if possible, early).
Give them a clear payment schedule in writing
This should help minimize confusion. It will also let them budget for the payments. If you’re able to, set up automatic email or text reminders to go out a week or even a few days before a payment is due.
Your payment schedule as well as your invoices and reminders should all be very easy to read and understand. People shouldn’t have to read through tons of fine print to figure out what they owe.
Provide incentives for early/full payment
If you offer customers a small discount on future service or even offer something at no charge if they pay in full before the total payment is due, for example, that may incentivize them to prioritize your bill over some of their others.
One thing it’s generally unwise to do is to get into the habit of providing more products or services to them until they’re paid up. That’s a good practice to have from the start rather than implementing it later when it will seem more like you’re penalizing them.
Regular follow-up is crucial
Set up regular reminders on your calendar, and start calling the customer if their payment is overdue. Often, it’s best for the owner to do it themselves. While it’s tempting to leave these calls to someone else, people are more likely to take notice and pay at least what they can if they realize the owner knows their payment is late.
These are just a few strategies. You may have your own. If you have problematic customers who owe you a considerable amount of money or are constantly late in making payments, it may be wise to seek help from professionals who can help you collect what you’re owed while still reflecting positively on your business.