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Business Partner Magazine

Tips and advice for entrepreneurs, start-ups and SMEs

This is What to Do When Customers Won’t Pay

August 8, 2018 by Contributed Post 2 Comments

Final Notice Rubber Stamp Showing Outstanding Payments DueYou’ve held up your end of the bargain, and delivered a quality product or service, yet your customer still seems unwilling to part with the fee. Sadly, this isn’t such an unusual situation, and if you are running an SME, it’s likely you have come across it more than once. Luckily, there are some strategies you can use to resolve payment issues and ensure you get what you are owed. Read on to find out what they are.

Ask nicely

Now, have you ever hear the phrase, “You catch more flies with honey?” Well, it means that you can get a lot more done by being nice, especially in the first instance. Of course, this doesn’t mean that you should be a pushover, but keeping things professional and stating your request clearly can often resolve the problem of payment before it’s become a significant issue.

Therefore, get your accounts payable person on the phone, or get them to pop over an email reminder that your invoice hasn’t been paid within the requested terms and that this needs resolving ASAP. In fact, if your accounts payable person has fostered a good relationship with the client you should find that this polite nudge is often enough to get the whole thing sorted.

Use an electronic system

Next, if you are having trouble with customers paying on time or missing their terms, it can be useful to switch to an electronic invoicing system. The reasons for this are numerous and include the fact that it is much easier to escalate the request and the client’s account status by doing it on the computer.

Of course, it much easier to send reminders and demands as well. Combine this with the ability to pay electronically too, and you are almost guaranteed to receive payments more quickly and on time as well.

Extend their terms 

Although, sometimes you are faced with a tricky client who demands longer terms that your usual 30 days!

Then it can be time to break out the big guns and extend their payment terms, an action you can take by using a cashflow finance service like invoice factoring. Factoring is when a finance company provides you will the value of the invoice, and then goes to the customers to collect.

A strategy that can take you out of the loop and ensure that you get your money when you need it the most.

Freeze their account

Last of all, if you have reminded them, sent electronic requests, and extended their terms, and they still won’t pay then it can be necessary to freeze their account. Of course, no business ever wants to do this to a client because it means their orders will decrease and it can damage the professional relationship too.

However, if they are not paying, you cannot continue to supply products, and the ultimate consequence needs to be employed. Just remember to do it all as professional as possible, and convey that you are keen to reinstate them as soon as their bill is settled.

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Filed Under: Featured Posts, Finance Tagged With: Accounts, cash flow, finance, invoice factoring

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    […] talking points such as areas to go over such as a feature or a special client privilege given to new customers. Overall give them the structure but no meat on the bones; they will be forced to do the best they […]

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