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3 Ways to Help Eliminate Late Payments

One challenge that many business owners often face is receiving payments (and on-time) from their customers. People often forget to make these payments and business owners are running around trying to obtain that payment. Late payments can be extremely harmful to your business by not only preventing it from growth, but also by affecting your daily cash flow. One late payment leads to another, which will then affect your credit score which could even damage you or your business in the future when looking for some extra funding or a new business. Here are a few great tips on how you can help your customers make those payments on time:

  1. Offer multiple ways of payment for your customers. This seems obvious, but the easier it is for your customers to make a payment, the more likely you are to actually receive that payment. Whether it is a check, cash, credit card or payment over the phone; being able to accept multiple forms of payments allows for all customers to be able to make those payments.
  2. Another simple way to receive payments from your customers is to offer different types of incentives. People love incentives; whether it is something free or a discounted item for the next time they come in your business, people will usually take that extra step. For example, if your customers make their payments within 30 days, they may receive a free coffee or 15% off their next purchase. They may then relay this message to their friends and family, which insures that all those payments will be made on-time. Incentives motivate people to do something so why not motivate them to give you your money?
  3. Make sure your customers are aware of when their payments are due. We can’t stress how important it is to make sure your customers know when their payments are due because if they don’t know, they definitely won’t pay. Send them a reminder every other week up until that payment is due so that they won’t even have the option of forgetting about it. Often times, people may not have all the money needed in order to make a payment so it is important to give them some time to gather the money. Reminding them a few weeks in advance allows them to have some time to scramble for some money and is a friendly reminder that they have an upcoming payment. As for monthly subscriptions, make sure invoices are going out at the same time every month. This keeps customers on a schedule and will get them used to a routine of paying around the same time every month.

Lastly, it’s important to be straight forward about your terms and conditions on payments with your customers. If your customers are aware of the consequences of not making payments on time from the beginning, they are less likely to make those payments. This also leaves less room for confusion when customers do not make their payments and you will then have the proof and documentation stating that the rules and conditions were made clear from the beginning.

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