When customers don’t pay on time outstanding invoices become the reason of small business debt and eventually failure. Small business owners need to keep their cash in a steady flow especially when they have very tight profit margins. Overdue accounts should be dealt as early as possible, in order to avoid any form of miscommunication.
Our experts have created a list of ways through which you can reverse your ‘soon-to-be-in-debt’ situation into a profitable strategy.
What to do when customers won’t pay their bills on time? Here are few things you can do to make customers pay on time:
1. Advance credit policy
First and foremost thing which you need to do before any business sale or deal is to be very clear about your credit policies with your customers. Create a credit agreement, where you can clearly outline the policies and conditions. This document should mark out three things
a) What and when to pay
b) Who is responsible for what?
c) Penalties of late payment?
Your customers should know that a legal action will be taken against them in case any amount remains unpaid after a certain time period. This credit policy should be sent to your customers with the script of overdue amount, so that they may know what to expect next from your side.
2. Keep Payment Records
After creating and maintaining a credit policy, you need to maintain cash history documents as well. Keeping a record for your customer’s credit files and payment histories is the best thing you can ever do to yourself and your business.
3. Chase the overdue
Be very assertive and sensible in your demand. You don’t want to lose your regular customer, and you need your hard earned cash too. In your meeting be very forward and ready with your facts and figures. Know your numbers and know when to start the chase.
4. Don’t stop the communication
Whenever you start the chasing process, just remember that you need to maintain a respectful relationship with the debtor. If the communication stops, then your chances of acquiring your cash will become meager. Remain in contact, keep reminding them and be sensible and respectful in face-to-face interactions.
5. Call in the experts
In case communication stops and there are no chances of acquiring your hard earned cash, then only a professional debt collector can help you in collecting your overdue amount the right way. But before you do that make sure that your amount is big enough for spending money on professional agents. Do your research and find out in advance how much fee the agent will charge for his services, you don’t want last minute surprises, do you?
Complete your homework before you plan to take any aggressive action. When it comes to cash dealings, every business owner should be able to tackle things peacefully, without creating a chaos out of the situation. Good business relationship in everything for a successful profitable business.