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Chasing Payments: A Small Business Guide To Getting Your Dues



By Business Desk



Friday, September 15, 2017.



If you are a small business owner or freelancer, there’s an excellent chance you will have experienced the agony of clients not paying up on time. It’s a huge issue - according to the National Federation of Independent Business, over 2/3rds of small business owners have invoices over 60 days old waiting to be paid.


Not only does it impact your cash flow and put you into financial difficulty, but late payments also mean you have to waste time chasing them. If this sounds familiar, read on - we’re going to explain a few things you can do to ensure it stops happening, and how to persuade your customers to pay up what they owe. Let’s take a look right away.


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Commit

You’ve done the work, and you should expect to be paid - no matter how much or little the amount. Many late-payers will use any excuse under the sun to avoid handing over what you are owed, and some will hope you are a problem that will just go away. It’s important to keep at it, however, and ensure you remain friendly, polite, and professional. But you should also always be firm. Ultimately, if you don't persist, you’ll find that this particular customer - and much more after them - will continue to take advantage.  


Communicate

Yes, it’s a hassle to chase up every payment on a weekly basis, but regular communication is critical. You might feel like you are being too pushy, or don’t want to cause offense, but you should be reviewing your accounts every week and making sure that any late payers are contacted on a regular basis. Lots of accounting software will allow you to send reminders automatically, so it shouldn’t take you away from your desk for too long.


Prevent

A lot of business owners issue an invoice and then assume they will get what they are owed by the due date. Don’t. People can be forgetful, and it’s often best to preempt late payers by sending them a reminder a few days before the due date. Using standard forms can help your customers feel like they aren’t being specifically targeted if you are worried about their feelings.


Phone

After several automated reminders, many late payers will eventually give you what you are owed - but not all of them will. In these cases, it’s time for a more personal action - using the phone. Consider doing this after a 30-day period - you’ll find that phone calls are a lot harder to ignore than simple letters, and it might just light a fire beneath your customer and get them taking action without even speaking to them.


Track

But what happens if your customer does a disappearing act? Sadly, it happens more often than you might think, especially with people who have a long history of owing money and have built up massive debts. In cases like this, you can either try searching online for them, but you will almost always get better results from using a professional tracing agent. Companies such as these can look for people that have disappeared, and understand the system well enough to locate almost anyone.


Scare

So, once you have found the eloper, or your customer still isn’t paying, it’s time to take things a step further. Taking legal action may not be worth it, but sometimes a simple demand letter can really help you shake up the late payer, as the threat of court and higher costs can often have a positive effect. No one wants to go to court, and the likelihood is that your customer will feel they have no choice but to pay what you are owed.


Finish

Finally, you have a big decision to make if your customer still doesn’t pay. There are a few things to consider - taking them to court, hiring a collection agency, or giving up. While taking your customer to court can be highly effective, there might be several issues it brings up. The costs of legal fees and lawyers could make the amount you are owed seem paltry, and there is still no guarantees the debtor will pay - what if they are going through bankruptcy? Once you start using debt collectors, you can say goodbye to getting back the whole amount, as they will want a percentage - is it worth it? However, deciding to give up leaves out entirely out of pocket, and having wasted an awful lot of time pursuing your money.


Conclusion

Clearly, if your problem escalates to the final stages, you have a big decision to make. However, in the vast majority of cases, most late payers will settle up long before this juncture. As long as you follow a strict plan of action, you will be more likely to get your dues. Good luck!




Chasing Payments: A Small Business Guide To Getting Your Dues

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