How To Deal With Late Paying Customers

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It can be incredibly frustrating when clients don’t pay on time. If you’re not getting paid, it could affect your own ability to pay bills. This can then lead to a vicious cycle of constantly being owed money while constantly owing money to others.

To keep your cashflow healthy and earn the money you deserve, here are several tips for dealing with late payers.

Chase them up

Waiting and hoping that customers will eventually pay up doesn’t work. If a customer owes you money, you have to keep chasing them up. Some customers may have genuinely forgotten to pay you, while others may be deliberately holding out until you chase them up.

You may be able to start by emailing them. If you get no response or they continue to not pay up, don’t be afraid to phone them up. A warning letter delivered to their door could be the next step if you still cannot get hold of them and they continue to not pay up.

Don’t feel bad about chasing up clients – it’s your money and you deserve it! Some customers may make continuous excuses or try to make you feel sorry for their circumstances. You may be able to negotiate a payment plan, but you still deserve that money.

Keep your cool

It’s very easy to get angry at late paying clients. However, this could cause a lot of harm to your business. A customer may leave negative reviews or they may sue you for harassment/verbal abuse if they feel you’re not acting professionally or are being unreasonable. Be firm but be friendly.

Know when to take legal action

If a customer continuously refuses to pay or retaliates with verbal abuse, you may be able to take legal action against them. It’s worth seeking legal advice to understand what you can and can’t do – there may be laws in place to protect debtors that state that you have to give several warnings first.

For large debts, you may be able to hire a collection agency. When customers go AWOL and don’t respond to any of your warnings, this can often be a necessary step to take.

Take measures to prevent future late payments

Certain measures may help you to avoid having to deal with late paying customers in the first place.

The first is to establish a credit policy when customers first sign up to your service – this should outline steps that you are legally allowed to take if a customer does not pay up such as adding late payment charges and possibly withholding your service. Such repercussions could prevent customers from continuously late paying.

You should also consider setting payment deadlines and sending automated reminders. This can prevent customers from genuinely forgetting to pay you (or at the very least pretending they’ve forgotten). Make sure to send out payment details with each invoice and reminders so that customers can’t use the excuse that they’ve lost your payment details.  

You may also be able to prevent late payments by offering early payment discounts. This could urge customers to pay up early so that they save money.