How Can Businesses Avoid Late Payments?

How Can Businesses Avoid Late Payments?

Learning & Development

Commercial Bank LEAP Team

Commercial Bank LEAP Team

27 week ago — 3 min read

More than 80% of businesses are closed due to cash flow problems. A major cause of cash flow problems is non-receipt or delay in receiving money owed to the business. It can harm the growth of a business and in some cases even threaten the existence of the business.

 

There are several reasons why business receivables may be delayed or not paid:

1. Inability to pay due to bankruptcy of supplier/customer.

2. Running out of time for the business to chase up debts.

3. The business does not have enough funds to finance a court case.

4. The business is afraid of damaging the relationship with the supplier/customer by claiming the debt.

5. Not knowing how to go about getting business debt back.

 

Here are some tips to overcome late payment challenges.

 

Do research

Before bringing a new customer into the business, check the client's payment history to make sure they have a good reputation for paying on time.

 

Agree to the terms of payment on time

Be sure to sign a standardized contract that spells out payment terms. This contract should clearly state the penalty to be paid when a customer defaults on your invoice. Include these payment terms on every invoice.

 

Send invoices on time

Make sure you send your invoices soon. Ensure that the details entered are correct to avoid delays.

 

Provide alternative payment methods

You can make it easy for customers to pay you by offering various payment options like bank UPI, mobile wallets, debit/credit cards. If your customers are in another country, receive your payment in their currency.

 

Manage clients efficiently

With many customers, keep track of customer payments. You can also use effective software to track and report customers from the moment they sign up with you.

 

Automate overdue payments

Tracking overdue payments can be challenging when you have hundreds of customers. This situation gets more complicated if you offer different tiers of services. To solve this problem, use an invoice tracker system. This way, you will get an alert when the invoices are overdue.

 

Learn the art of using technology

When you have a large customer base, searching one by one about payments becomes difficult and complicated. So, make your automated tracker system can identify customers with overdue payments and send appropriate messages. The technology then takes care of the payments for you, without harming your and your customers' goodwill.

 

Don't give up

If you have overdue invoices, make sure to get them pay anyway. Get them to pay a portion of your payment by giving them options like paying in installments.

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

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