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What To Do With Late Paying Customers

Thursday, June 18, 2015   By Mike Reddy

 



The scenario is typical: product has been delivered, invoices sent, reminder notifications pushed out, and still no word from the customer.  Ladies and gentlemen, you have a late payer!

Chances are this business might also be trying to stay afloat and has their own system of paying bills in the nick of time before collections are involved.  You can always start by tracking down an actual person to find out what the hold up is.

But good luck with that….

No really, as a business coach I strongly suggest your process should always start with invoices and follow ups, lots of follow ups. Followed by a phone call. Once you have someone, remember: be clear, be polite, be convenient and be flexible.

Clearly reminding the customer of your terms and conditions is a great way to slip in the fact that they have entered into a binding legal agreement and payment is not optional.

Politeness goes a long way. Even though you are collecting, chances are you wish to keep the client as a returning customer. It is entirely possible to remain calm and collected and polite, while still being firm.

Perhaps make notes to yourself before making the call so that you don’t let emotions get the best of you.

Conveniently offer a range of ways in which the customer can pay. The more options you present, the less likely they can say no to at least one!

Finally, flexibility allows the customer to feel as if you understand their restrictions and are willing to work with them. Payment plans, installments, discounts on upfront payments in the future can all help a customer feel catered to and valued.

If you are finding yourself in this situation more often than not, it may be time to revamp your terms and conditions and revise your billing system to find where you are losing steam.  Take a look at your payment policies - do they clearly portray timelines and expectations?

In the end, you may find that you need to send the customer to collections and effectively terminate the relationship. 

And this is okay too.


Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.