The cash flow of a small business is dependent on, you guessed it – cash. This is one of the main reasons why late-paying clients can be frustrating for small business owners. After all, it ties up money that you’d need to pay your bills, and it can also be a huge drain on your time as well. Studies have shown that business owners spend around 1.3 days every month chasing down money that is owed, so you need to make sure that you don’t end up in this trap if you want to make the most out of your company.
You Deserve Money
Nobody likes to feel as though they are pestering someone. This is understandable, but if you are owed money, you have to make sure that you get it because if you don’t, then you may end up compromising your business. Asking people to pay is part of your business. Dealing with late-payers all starts with you adjusting your state of mind, so put in the work and make sure that you are doing everything you can to get what you are owed. The sooner you do this, the sooner you will find that you can reap the benefits. Having an invoice software can really be beneficial too, so click here to find out more.
Establish Payment Deadlines
One way of dealing with clients who pay late is to try and establish deadlines which cannot be moved. You need to do this before the client signs a contract to work with you. Sure, 90-day payment deadlines and 60-day payment deadlines might be common but at the end of the day, you should never adopt them because other clients are. You need to do what works for your business because when you do, you will soon find that it works out in the end.
Adopt Incentives and Penalties
There are so many things that you can do to try and protect yourself from late payments. The first thing that you need to do is offer a financial incentive. If you know that the contract payment deadline is 30 days then offer a 5% discount for those who pay in 7 days, If you want to stop customers from paying late then charge them a 10% late payment fee. When you do this, you will soon see that it is easier than ever before for you to not only get the service you want from your customers, but to also motivate them to pay early.
Don’t Get Angry
You know that the business you run is dependent on cash flow, and late-paying clients can make it hard for you to run your business. Even so, you should not get angry at your customers. After all, there’s a chance that they are trying to balance everything out as well and they may have their own small business issues to deal with. If this is the case, then you need to work with them to give them the support they need during times of difficulty. If you do this then you can be sure to retain your customers for life.