By Eleanor Wyatt
Remote Work Wellness
If there is one thing business owners know, it’s that late payments happen. And while you cannot altogether avoid them, late payments can significantly hurt your cash flow, making it next to impossible to run a profitable company. That’s why, as a small business owner, it’s essential to have a plan in place for minimizing the effects.
The good news is that you can reduce the occurrences of late payments without damaging customer relationships. Below, Eleanor Wyatt with Remote Work Wellness wants to share how!
Use the right software.
One of the most common reasons customers forget to pay or are unable to pay is that the business doesn’t offer diverse payment options. Zenbusiness.com recommends that you use a payment processing system that makes it easy for customers to pay for your products or services. This will leave you with fewer frustrated customers and ultimately help you build your customer base as you establish a reputation for easy transactions.
Customers expect several different payment options these days, and if they don’t get it from your business, they will simply choose another one. Besides accepting debit and credit card transactions, consider adding PayPal, Venmo, Apple Pay, Google Pay, and other platforms to your options.
While you’re at it, make sure your accounting software is up to date and effective. QuickBooks, FreshBooks, and Xero are some of the most popular accounting tools among business owners and entrepreneurs. Incorporating top-notch accounting tools will do wonders for helping you manage your business finances.
Set up reminders.
If a customer is late on a payment, consider sending them a friendly reminder via email after the due date. Along with being professionally and politely written, your reminder emails should include the payment due date, as well as the various payment methods your business accepts.
It can also help to attach the original invoice in case the customer misplaced their copy. In most cases, an overdue invoice is simply the result of the customer’s busyness and that they inadvertently let the invoice slip through the cracks. You can help with future missed payments by sending reminder emails or texts a few days before the due date.
Reach out directly.
If you do not get a response from your reminder email, you may need to contact the customer directly. Of course, you will want to maintain excellent customer service and friendliness when calling the customer so that you do not risk harming the relationship.
To help get to the bottom of the matter more quickly, make sure you call the right person. For instance, you may want to contact the head of the billing department or reach out to the business owner directly if you have formed a good rapport with them. Generally speaking, you will get better results by talking with the individual you deal with most often.
Give them a reason to pay early.
Another method for preventing future late payments is to incentivize your customers to pay early. For instance, you could offer specific product releases or discounts for early payment. On the other end of the spectrum, you could establish fees and penalties for late payments. Just be sure that your fees and penalties are reasonable because, after all, you want customers to like your company!
Revisit your cash flow plan.
Finally, few things can hurt a business more than cash flow problems, and late payments are one of the biggest culprits of such issues. Make sure you have a cash flow plan in place for your company that allows a margin for late payments. Even if you take all of the precautions mentioned above, you can still run into late payments. Regularly forecasting your cash flow will enable you to thrive despite customer payment problems.
Late payments can run your business into the ground if they are left unaddressed. Consider the tips above for responding to late payments and maintaining good relationships. And, of course, keep looking for other ways to improve your customer service and build upon your customer loyalty!
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