When you run a small business, the margins are often pretty tight. You might be unable to afford to allow clients to pay later than they had agreed to. Nevertheless, many small businesses deal with clients who don’t pay their invoices on time, which can be a source of frustration.
So what can you do when you find yourself dealing with clients that are not making their payments on time? There are plenty of options open to you and you certainly shouldn’t allow yourself to lose hope completely. Read on to find out about some of the ideas that might benefit you.
Get to Know the Client
Getting to know your client is always an important first step to take. Yes, they might have failed to make a payment on time, but that doesn’t necessarily mean that it was done in a malicious way or for malicious reasons. If it’s the first time that this happened, it might simply be the case that you need to take the time to understand their position and situation better. That way, you can find out if there are problems that need to be addressed in order to ensure payment deadlines are met in the future.
Negotiate a Solution
Coming to some kind of solution is obviously important. If the delay was caused because of a problem that the client had with the work that they received, then that’s something that you’ll need to work on and think about as soon as possibly can. You might have to come to some sort of negotiated arrangement that you feel is fair. But finding a fair solution is not always easy, and third-party mediation can sometimes be necessary.
Don’t Just Let it Slide
It’s important not to just let things slide or to be too relaxed about these issues. When your clients feel like they can get away with these kinds of bad behaviors, they’ll likely just carry on. After all, you’re running a business here, not a charity. You have every right to expect the work you do to be compensated in a timely fashion. So don’t be afraid to speak up and don’t feel as if you can’t say anything for fear of upsetting a client.
Ensure Your Invoicing Practices Are Up to Scratch
Making sure that your invoicing practices are up to scratch and able to keep the business in the right financial position is certainly key. You can’t afford to make slip-ups that then cause payments to be delayed. This is often one of the reasons why payments end up being made late, and it would be completely avoidable if you improve the processes at your end. So that’s something only you can fix.
Consider AR Financing
If you want to make sure that your business doesn’t suffer as a result of clients not making payments on time, it’s important to look at the options that’ll help you from a financial point of view. There are platforms such as Lendio that allow you to use AR financing to cover your costs against the unpaid invoices that your business has. That means, you can get the money early, and then when the late payments are eventually made, that can pay off the credit you initially took out.
Remaining persistent when clients are late to pay for no good reason is important. You don’t want to drop the issue and forget about it because then there’s a real risk that you’ll never get the payment that you’re owed. If you keep reminding them of their obligations, they should eventually remember that they have to make that payment and there’s no escaping it.
If it Happens Repeatedly, Make it Clear There’ll be Consequences
If this is something that happens on a regular basis, you should make it clear that you won’t accept it forever and that there will be consequences. There’s nothing at all wrong with dropping clients that repeatedly break the rules and fail to pay you in a timely fashion. If you’re in a position where you can afford to let clients go, you should consider this course of action.
Clients who refuse to pay on time can certainly be frustrating and a problem for your small business, so don’t just ignore the issue and hope that it will resolve itself because that’s unlikely to be the case. Instead, make the most of the ideas that we’ve discussed here today and ensure you know how to deal properly with clients who make late payments.