Late payments happen, no matter what your business is or how timely most of your clients are. If you worry about the impact of late fees on your customer relations, there are do’s and don’ts of how to handle collections without ruining your relationship – Business on the Internet presents some ideas below.
Don’t Start a Business Unprepared
Even if most customers are reliably punctual, you will likely have to deal with late payments now and then. You should cover how you plan to deal with clients who pay late from the start. Start with considering late fees. Figure out how much you want to penalize your client. You do not have to charge a significant amount. Most clients want to avoid any and all late fees.
Always have terms available before you begin a project with a client. Put everything out for the customer to see. You have expectations of payment, and the client needs to understand when to pay and what happens when payment does not arrive by the deadline.
Do Create Incentives for Clients
Your relationship with your clients is the foundation of your business. You should build a customer relationship based on listening and offering feedback. When you listen to what your clients want, keep in mind incentivizing them to pay on time.
First, try providing a discount for those who pay early. As well, make it as easy as possible to pay you. Clients who have difficulty paying may procrastinate or have trouble getting you the money even when they want to pay on time. For example, if you do not accept credit cards, you may lose money. Offer a variety of payment methods that clients may use.
Don’t Diminish Your Value to the Client
Late payments do not necessarily mean that you have to cut off your relationship with a customer. While you need to be firm and receive your compensation, do not be aggressive. Consider creating an email script for late payments. Try several friendly emails before you become serious with your terms. If you receive no response, you may need to pick up the phone and contact your client.
Try to be compassionate. When you treat your customers with kindness, they will more likely remain loyal in the future. Be empathetic: If clients are having financial trouble, they may be afraid of opening up. If your customer talks to you honestly about a hardship, try to be as compassionate as possible. You may offer a payment plan or other deal to work with the client’s situation.
Do Seek Professional Assistance
As your business grows, it can become more difficult for you to track your finances. When you have a lot of sales, it becomes more challenging to track who owes you money and how much. An accountant can balance your books, track payments and create graphics to help you gain a better understanding of your financial situation.
When hiring an accountant or bookkeeper, look for someone trustworthy, with attention to detail and experience in the finance field. At first, you may not want to bring a full-time accountant on board. Many small businesses cannot afford to hire a full-time employee for bookkeeping. In this case, consider a contractor. If you don’t have the free time to look through potential hires or screen skills, hire a recruiting agency to connect you with skilled financial professionals.
When it comes to your business, you do not want to damage the customer relationship while asking for late payment. Take steps to encourage prompt payment while strengthening your relationship with your customers.