One of the most unsettling parts of doing business is trying to recoup late payments from your customers. On one hand, you need the money to pay your employees and grow your business, but on the other hand, if you insult the customer while trying to get your money then you may lose them, which could hurt your business. It is not an enviable position to be in. Here at expenseRegister, we help people manage their money, so we have some tips for how you can recoup late payments with grace.
No one wants to have to deal with recouping late payments, so if you can be proactive to avoid them in the first place then you won’t have to worry. Start with your invoices. At the bottom, mention that late payments may be subject to interest or fines. Make sure this is at the bottom of every single invoice you send so none of your customers feel like they are being singled out.
Btw... expenseRegister also offers a simple invoicing feature that works very well for small business. Check it out when you get a chance.
A great way to not only get your invoices paid on time but also create a happier customer base is to offer a perk for on-time payments. It doesn’t have to be a major reward and could be something as simple as $5 off of their next service or a coupon for a different service that they never received before but you believe that they may be interested in purchasing. You could even create a membership system where if a customer pays on time over a certain period of months then they get special rewards.
If you learn that a payment is late, your first step should never be to call the collections agency or send a threatening letter because you will likely insult the customer and they will probably never return. Instead, it is worth it to give them the benefit of the doubt and first assume that they simply did not realize that they owed money. Consider sending a form letter to the customer reminding them that there is a balance due.
In your letter, thank them again for their business and then remind them of the balance due. You could also mention something about how the customer can contact you to discuss the payment if they have questions.
If the customer is not responding to your letter or a follow-up email, then you might consider giving them a call where you remind them of the payment. Letters can get lost in the slush pile, but if you get them on the phone then you will usually get some answers. Remember to be polite during your phone call, and if you leave a voicemail, remind them that they can call you back if they have questions.
If you notice that you have a lot of customers with late payments, then it may be that your payment process is too complicated. You may find that bringing in owed money is easier if you use technology to make the payments automated or otherwise simple to pay. On your website, consider using API products like those offered by Plaid.
This tech takes the guesswork out of the equation by instantly authenticating bank accounts for payments. Also, the software will automatically verify the user’s identity which reduces the chances of fraud. Basically, it means getting your payment right away so you don’t have to worry about the drama.
As you can see, there are many ways that you can handle late payments without upsetting your customer base. Try the tips above and your business will run much more smoothly. If you need help with expenses, budgeting, or financial goals, then contact expenseRegister at the form here.
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