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7 Tips for Working with Slow Paying Customers

It’s hard enough to stay in business these days without having to worry about slow paying customers. But, unfortunately, most of us have them so it’s something we have to grin and bear. The good news is there are a few ways you can entice these procrastinators to stop dragging their feet and pay in a timelier manner, improving cash flow for your organization. Here are 7 tips for effectively dealing with slow paying customers. 

Clearly communicate your terms. If you expect payment upon receipt, or net 10, etc. – make sure your customers understand this requirement by clearly stating it in writing on each and every invoice. That way there’s no question of when payment is due.

Stay on top of sending invoices. As soon as the job is done or the product is shipped, send your invoice. You can’t hold your customers accountable for paying late if they’re not getting billed in a timely manner.

Itemize. Make sure that every item or service you are billing for is clearly noted on your invoice to avoid any confusion. Assign item numbers and use detailed descriptions. The more information you provide, the less likely you’ll be to have a customer delay paying because they’re unclear as to what they’re being billed for. 

Understand their requirements. Depending on the size of the company you’re dealing with, they may have several of their own requirements in order to process timely invoice payments. Ask upfront what is required on their end for speedy processing, such as P.O.’s or other documentation that you can arrange on your end so that all requirements are met in the first shot.

Establish relationships. A great way to ensure timely payments is to get to know the person on the other end of that remittance check. Learn who the Accounts Payable contacts are in each of the firms that you do business with and make it a point to establish relationships with them. 

Implement a late fee policy. If you’re really having problems getting people to pay on time, it can be an added incentive when you implement and enforce late payment fees. Just be sure that this policy is clearly communicated upfront, otherwise you won’t be able to enforce it.

Pick up the phone. Never underestimate the power of a personal touch, especially when it comes to collecting a debt. Instead of sending another invoice, try picking up the phone and calling to inquire on when payment will be made. This is where the whole “establishing relationships” comes in handy, as well. If you know who cuts the checks, you’ll know who to ask for when they’re late.

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posted by Rebecca Daneault @ 4:18 PM