Late Payment Mistakes: Don’t Compromise Your Clients for Policy
Written by Gabriel Patel.
As a small business owner, you need to have a policy to deal with late payments. Collecting late payments does not have to ruin your relationship with your client. MagicPay recommends steering clear of the following mistakes to create a stronger relationship with your customers.
Mistake #1: Failing To Disclose Late Policy
Agree on all terms in advance. If there are any incorrect invoices, this may slow the payment process or lead to other issues. You can charge a late fee, but inform the client of the fee policy in advance. Make sure your policy is clear and transparent. For example, the client should be able to view the late policy on his or her bills.
You may want to consider offering incentives for your clients to pay on time. One form of incentive is to offer a discount for clients who pay early or pay on time. If you offer a payment plan, you may want to offer discounted prices for those who decide to pay in full or pay the full bill within a specified timeframe.
In addition to a late policy, try to offer diverse payment options to your clients. When you have diverse payment options, the client is more likely to pay you for your goods and services. Merchant services like MagicPay offer a variety of payment processing solutions that make it easy for customers or clients to submit payments.
Mistake #2: Acting Cold Toward Your Clients
According to the experts, even if you’re dealing with a difficult client, stay calm. Try to express empathy toward your customers. Being compassionate is more likely to calm someone else down or encourage a client to pay his or her bill. While you deserve to be paid, you do not want to treat clients like numbers. If they feel you don’t care about their situation, why would they care to pay you? Make a connection with your clients ahead of time.
Customers want to feel like humans and not like dollar signs. Ask questions about your clients and provide information about yourself too. If you are someone that he or she can relate to, the individual may treat you with more respect.
Mistake #3: Harassing Your Clients
No matter how upset you are at your client’s failure to pay, never harass them. Some business owners use tactics to shame their clients or to pressure them into payment. While you deserve payment for goods and services, you do not want to treat any of your customers poorly. Disrespecting your clients will spread around. The customer will not face the consequences, but people may be reluctant to work with you because of how you acted with the former customer.
When you harass a customer into paying, they may become resentful. Out of resentment, they may continue to refuse payment. If you have a client who normally pays on time but suddenly cannot pay, you may want to follow up after a week or two.
Sometimes sending the letters on the weekend helps because you do not have to compete with anyone else’s attention. If you want to send an email, send it on a Tuesday before or after lunchtime. Your letters and emails should include all of the invoice information. If necessary, send a letter of intent to the client to inform him or her you will seek help from a debt collector. Be sure to keep your files and documents organized in the event that you have to seek debt collection help. Simply download necessary documents, and then reduce the PDF file size so that it’s easier to share when the time comes.
When seeking late payment from a client, act sympathetic and compassionate. Be transparent with your late policy ahead of time so the client does not feel blindsided, stay warm, and never resort to harassment.