Nothing worries a business owner more than overdue payments. Late payments can derail your very own cash flow. For small businesses, overdue payments can even put an end to their operations.
This is why it is crucial for your accounting team that customer payments are delivered on time. However, this is not always the case. At some point, you’ll encounter late payments, and following up on them is never an easy task.
Even with the threat to their business, it has never been easy for owners to chase down their customers’ late payments. Calling up your customers to follow up collections can go multiple directions, and produce even greater problems than what it intends to solve. To help you in this regard, here are some things to keep in mind in chasing customer late payments.
Bring a Positive Attitude in Every Approach
It may be frustrating to chase after payments that should have been settled on time, especially when it threatens your cash flow. Dealing with a number of customers will take its toll on you, but it is necessary to maintain composure. Remember that you are dealing with customers and partners, and it is necessary to maintain friendly relations with them. Approaching them in any other way will defeat this purpose.
Prepare Documents to Back up Your Claims
As you prepare to engage your customers about their overdue payments, you first have to establish the fact that the due date has already passed. One of the best ways to do so is to have the right documents ready just in case they want to ask some questions. Some of these include contracts, engagement letters, and other documents that prove mutual understanding on the settlement of payments.
However, remember that these documents should be used only to confirm the details of the agreement and clarify some doubts. Leading with these documents may come out too strong and leave unintended impressions in your customers. A good practice is sending a sound overdue notice to notify your clients
Each Approach Should End with a Solution
Always keep the end in mind in every conversation that you initiate with your clients. Chasing overdue payments may be hard and frustrating, but emotions should never divert your attention from your end goal and settle a solution with your customers on their late payments.
The best solution is to have an agreement that preserves your interests and takes into consideration the status of your customers. During the conversation, listen to your customers and take their situation into account. Try to work out a solution that is agreeable to both parties, maintains a healthy partnership, and ensures the continuity of your business in the long run.
Chasing after your customers’ late payments can be exhausting not just on your part, but also on the part of your customers. Emotions can easily run high and aggravate the situation. Keeping these things in mind will help you find a clearer resolve and reach a settlement that is fair to both you and your clients, and help you maintain your ideal cash flow.
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This article was first posted 21 September 2017 and edited 07 July 2020.