Why your customers don’t care about paying you late
When a customer exceeds agreed payment terms it can be frustrating. But, arguably, what’s more frustrating is trying to ascertain the reasons behind the late payment.
Here we look at six reasons why your customers might not care about paying you late and what you can do about it.
1. They didn’t know they had to
It seems like a silly excuse, but if you haven’t made it perfectly clear when and how they should pay some customers won’t.
Always make sure that your invoices clearly display your credit terms, the exact date payment is due by and how the customer can make payment. Failing to do so could lead to significant delays.
Here are 10 common invoicing mistakes that delay payment. Is your business making any?
2. They genuinely can’t afford it
With rising business costs, widespread late payment and increasing economic uncertainty it’s not surprising that some businesses are struggling to keep on top of their cash flow. And, as a result, some customers may not be in a position to settle their invoice with your company.
In these instances, it can be beneficial to set up a payment plan so that you get paid, even if it’s over a longer period of time. And, to limit this happening in the future, perform credit checks of all your customers, existing and new, to check the risk they pose to your business before offering credit terms.
This blog post looks at the pros and cons of credit reports. Could utilising them protect your business?
3. You’re at the bottom of their payment list
When a business has a mountain of bills to pay it’s not uncommon for them to prioritise their payments.If you find yourself at the bottom, you could find yourself waiting beyond terms for payment.
To make sure you stay at the top of all of your customers’ payment lists and get paid on time, every time, regularly keep in contact and build a relationship.
4. They don’t take your credit control efforts seriously
If you fail to demonstrate a persistent and professional credit control strategy your customers may not feel the need to pay within agreed terms.
So, always show from the outset that you do not tolerate late payment by explaining your credit control processes in your terms and conditions. In the event of late payment, common tactics include charging late payment interest, outsourcing to a debt collection agency or taking legal action.
5. You keep letting them get away with it
If you let a customer get away with paying beyond terms once, the chances are they will do it time and time again.
Show that you don’t tolerate poor payment practices by using the tactics mentioned previously and by putting persistently late payers on a stop list, refusing to trade with them again until all invoices are settled. In the future, you may want to take full or partial payment up front to protect your cash flow and demonstrate that you take late payment seriously.
6. They believe their terms overrule yours
Especially when dealing with larger businesses, it’s not uncommon to experience poor payment practices as a result of supply chain bullying.
One of the best ways to safeguard your business against these practices is to make sure you and your client are on the same page from the beginning. This can be achieved through effective terms and conditions.
By clearly stating what you expect from the client and what they can expect from you from the outset, you are setting expectations that could help to limit disputes and avoid any potential surprises in the future.
If you need helping getting your customers to pay, as a commercial debt collection agency we could help. Call us today on 0800 9774848 to see how we could help you get back what you’re owed.