We’ve all had moments when we’ve needed to access finance to help get us through an emergency, and many people turn to borrow from direct lenders. Other people lay look at payday loans as a way to get the cash they need quickly. However, when it comes to repaying your debt, sometimes it can be a lot harder than you previously thought. The same sentiment can be extended to business as well. You may be awaiting payment from a client, or a repayment may not have yet been received. No matter the circumstances, it boils down to the fact that you’re missing a payment because they were late repaying it. If you want to limit the number of times this happens to your business, keep reading and discover 6 ways you can tackle late payments.
1. Credit Checks
Running a credit check on clients or customers before you lend to them is essential in assessing their affordability. It can also help you to spot any untoward activity that may suggest that they’re too risky to lend to as well. If you’re going to be working with another company, you can actually run a credit check on them using a third-party application. This can help you make business decisions such as whether or not to work with them as a bad credit check could suggest they won’t pay you back on time. Tackling late payments is as much about chasing for payments as it is trying to prevent them from happening in the first place.
2. Offer A Range Of Payment Methods
When it comes to accepting repayments, you need to ensure you’re able to take it in a lot of ways. If you only accept payment by bank transfer, some people may not have digital banking or if you take payment via card over the phone but are only open on working days and hours, people may not physically have the time to call you and make the payment. Although you might believe that a late payment is always going to be the customer’s fault, in many cases, it could actually be yours too. Try broadening your payment methods and then take a look at how many late payments you have the next month. The results might surprise you! Making your company accessible to everyone is one of the best ways to ensure you get your payments on time.
3. Invest In A Collections Team
Sometimes things can get a little too much for you to handle and the constant going back and forth with the customer can get you nowhere. This is why it’s a good idea to invest in a Collections team. This specialist team should be made up of experts in the area and will know exactly how to chase and deal with late payments. Enlisting their help will also free you up to get on with the things you should be doing, instead of spending time trying to track down missing payments from uncooperative customers. They’ll be able to not only obtain the late payment but also, they’ll be able to maintain a positive relationship with them as well. This can be great for your business and will help you retain more customers in the long run.
4. Clear Terms And Conditions
A late payment can be a genuine mistake sometimes, so because it’s likely to not happen again, you might think it’s okay to forget about it. However, you should look into the reason for the mistake further as it could be something that’s missing in your terms and conditions. When customers use your business, they should be able to read and understand any agreement you make with them. If not, things like late payments are bound to happen. For example, if you aren’t explicitly clear about when and how payments need to be made, a customer could easily misinterpret your terms and conditions, making them miss the payment through no fault of their own. Spend some time going over what you send out to customers and make sure that it’s easily understood and won’t cause any confusion. You’ll definitely see a decrease in late payments if people know exactly how to do it.
5. Don’t Be Afraid To Chase
Some companies, especially newer ones, may be afraid to chase people for their late payments. However, you’re well within your rights to contact your customer if the monies haven’t been received. You don’t need to take an angry approach either. Be open to communicating with them and offer other options if they aren’t able to make it. If you’ve spoken with a customer and they’ve promised to make the payment on a certain day and it’s not been received, there’s no harm in chasing them up and asking them to confirm what’s happened. Chasing up late payments will help you stay on top of them too and prevent any of them from slipping under the radar.
6. Penalize Repeat Offenders
If a customer is repeatedly late with their payments without a good reason, then it might be time to enforce some penalties. This doesn’t have to be anything particularly harsh, nor do you want them to accrue a massive debt on their account with you, but you should put something in place to help deter late payments. Try bringing in late fees that will incur if a payment isn’t made on time or if a customer is refusing to pay, you can bar them from using your services. This is a worst-case scenario as most customers will pay eventually, even if they have to do it using a payment plan. But knowing that there could be consequences to missing a payment can sometimes be enough to encourage people to pay on time.
Late payments are an issue that most companies will deal with at some point, but it’s how you tackle them that will make the difference. Make your payment terms clear and provide a variety of ways to pay to cut down on any payments missed by mistake. You should also think about bringing in the experts and utilising a Collections team alongside penalties. Combining these top tips will really help you to receive your payments when promised and also keep your customers happy too.
Related posts:
5 Simple Ways to Boost Your Business Credit Score 
A Guide to Using Business Credit Cards 
Clear launches #KeepAClearHead, a global campaign to equip young people with the resilience they need to perform at their best in the face of rising social anxiety 
5 Different Ways to Embrace Contactless Payments 
Why Credit Cards are Good for the Economy 
Top 10 Best Ways to Accept Credit Cards for Small Business
